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Payment Applied to Principal & Interest

In the monthly payment on my mortgage, how are the funds applied to principal and interest?

I have 2 mortgages: A conventional 4.75% 15-year fixed and $120K left for 10 years and equity of $50,000 for 10 years 7% fixed. But there is something strange going on with principal and interest. Some months there is more money going towards principal and the other months more towards interest. Should I refinance and combine both? Will I lose or save?

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Bill's Answer
(7 Votes) | Find Learn Save

I do not know why the distribution of your mortgage payments to principal and interest change from month to month. On a fixed-rate loan, the amount applied to principal generally increases slightly with each month. However, the application of payments on home equity lines can be somewhat more unpredictable, especially in case you are still making charges on the equity line, thus increasing the balance.

If you think your payments are not being applied to your accounts properly, contact your lenders to discuss the problem and learn how your payments are being credited. If after speaking with your lenders, you still believe your payments are not being credited accurately, you may wish to contact an attorney to discuss what recourse you have against your lender. However, I expect that once you speak with your lender, you will find your payments are being properly applied, as it is unlikely your lenders purposefully misappropriate your funds.

talk to one of's lending partner to learn if a mortgage refinance will save you money. it costs you nothing to learn if you qualify for a low-cost loan.

Based on the information you provided, I cannot tell you whether a refinance loan will save money over your current loans, though I certainly encourage you to consult with various refinance lenders to discuss the options available and the costs and benefits of refinancing your home. The 4.75% interest rate you are paying on your current primary mortgage is certainly a good interest rate, especially considering that the average rate on a 15-year fixed rate loan is 5.54% (as I write these words in 2007). Given this fact, I doubt a refinance lender will offer you a better interest rate. However, it certainly will not cause any harm to discuss your situation with lenders to find out if combining the two loans at a slightly higher rate will save you money over your current loans. Visit the refinance page to read more about refinance loans.

I wish you the best of luck in your search for a refinance loan that fits your needs. I hope this information helps you Find. Learn & Save.



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  • LB
    Jan, 2014
    Greenville, SC
    I know this is an old question...but couldn't it be possible that the OP is paying the equity line late (any day past the due date, likely the 1st?) Additional interest would apply daily, correct?
    0 Votes

    • BA
      Jan, 2014
      Certainly a possibility late payments here caused a variance in interest. What you point out is it's always a good idea to understand how late payments may impact a loan.
      0 Votes