A frequently asked question is whether a mortgage borrower receives any benefit from paying before their due date.  In most cases, the answer is NO, however there are a few exceptions.  With Simple-interest mortgages, including home equity lines of credit, it DOES pay to pay early and under some circumstances, paying early in order to shift next year's interest into this year could reduce taxes plus shorten your mortgage loan term.

     When payments are early:  Payments made before the due date are also credited as that date.  This gives the lender free use of the borrower's money for that period.  Simple-interest mortgages, interest accrues daily rather than monthly, which changes the rules significantly.  As with standard mortgages, payments are due on the first day of the month and lates fees are charged on payments received after the grace period (5 to 15 days depending on the mortgage).  

     The bottom line is a borrower who consistantly pays early will save money on a simple interest mortgage.  Depending on your initial agreement with the lender, you can pay at least one extra mortgage payment per year above your regularly schedule payment and reduce a 30 year note to an estimated 18 to 19 year note, that easy!  Ask your mortgage company or lender to give you an amortization schedule so you can keep tract of the extra payments in turn your balance will reflect a lower amount.  It is usually better to make a special payment with a check or online payment with a instructions attached that the payment go directly to principle of the mortgage loan, so there is no confusion.  In some cases you can even set up your automatic monthly payment so that each month you pay 1/12 of your payment extra toward your principal.