Why aren't my extra mortgage payments going to principal, and how do I make sure they do?

Why is this happening?

If you send more than your payment without instructions, the servicer might:

• Hold it as unapplied funds,
• Apply it to your next payment (paying ahead, which doesn't reduce interest), or
• Put it into escrow.

None of those lowers your principal the way you intended.

How do I make sure it goes to principal?

• Online: use the servicer's "additional principal" box, separate from your regular payment.
• By check: send a separate check marked "apply to principal only" with your loan number.
• Autopay: set up a recurring extra principal amount through the servicer, not your bank's bill pay.
• Check your statement the next month to confirm the principal went down by the extra amount.

What if it was applied wrong?

Call the servicer and ask them to reapply it to principal, then follow up in writing. Servicers have to respond to written requests about errors.

Are "biweekly payment" programs worth it?

Paying half your payment every two weeks works out to one extra payment a year, which does pay the loan off faster. But some third-party programs charge fees for something you can do yourself for free by adding a little extra principal each month.

Example scenario (illustrative)

A homeowner in Irvine sent an extra $300 a month for a year and noticed his balance hadn't dropped by the full amount. His servicer had been applying it to future payments. After he switched to the "additional principal" option, every extra dollar reduced his balance, and he's now on track to pay off his loan years early.

Our take

Extra principal is one of the simplest ways to save on interest, if it's applied correctly. Mark it clearly, check your statement, and don't pay anyone a fee to do it for you.