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Years ago I learned a lesson I won’t have to learn again. It was that poignant. It was during a time when mortgage interest rates took a nosedive and we benefited by refinancing our high-rate mortgage.

The transaction closed in late August with the first payment due in October. Rather than take a month off from making a mortgage payment we made an unscheduled payment in September to reduce the principal balance right off the bat. We sent a letter with the payment and wrote “Principal Prepayment” on the check.

A few weeks later we got a statement showing that the payment had been credited to the October payment, not to pay down the principal as instructed. The confused customer service rep was kind but hardly apologetic when she explained that someone must have assumed that we really wanted to “pay ahead” rather than “pay down.” It took a little persistence to convince her to the contrary.

Applying that payment to the principal balance was good for us because every penny of that unscheduled payment went to reduce the balance—no interest was due until October. That was profitable for us, but not for the lender.

By reducing the principal at the beginning of the loan, we would go on to save more than $4,000 in interest and cut three months off the term, which we did and oh what a happy day that was!

On the other hand, applying it to the October payment would have put almost the entire amount into the lender’s pocket in the form of interest.  Read more

multi-ethinic arms outstretched to ask questions.

If it’s Friday, it just might be Ask Me Anything day when I reach into the mailbag and pull out three recent questions from my loyal, loving readers—two of them with the same name!

My dog recently had a “scare” and piddled on my hardwood floor. I did not catch it right away. I now have a stain. Is there anything you would recommend to get rid of it without refinishing the floor? Thank you. Linda

Dear Linda: This is tough. It’s difficult to know if you have a stain sitting on top of the floor or if the floor’s stain has been penetrated and bleached by the heavy presence of ammonia in dog urine. Regardless, it’s surely worth a try to see if this can be reversed. Here is a recipe and instruction for removing dog urine from a hardwood floor:

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Over the years, I’ve had many wonderful opportunities to address audiences large and small, at all kinds of event from retreats to conventions, college chapels, and conferences throughout the U.S and abroad.

It’s one of the best things I get to do and I am always honored to be invited. The part I enjoy most happens when I’m done and it’s time to take questions from the audience. I value the trust my readers have in me, whether at a live event or right here on the blog.

Household_Paid-In-Full_Gift

A Gift You’ll Never Regret Giving Yourself

Dear Mary: We owe about $200,000 at 4 percent on our 15-year mortgage, and have the money to pay it off now. If we do this, we lose the tax benefit of the mortgage interest and the possibility of being pushed into a higher tax bracket. One way to avoid this would be to purchase a second home, get a mortgage and rent out the house. We’ve heard that the rental market is good in our area. What do you think of our idea? Alex

Dear Alex: My advice depends a lot on your age. If you are nearing retirement, I recommend you bite that tax bullet and pay off the mortgage. That will assure you a rent-free retirement—a gift you’ll never regret giving to yourselves.

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