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Additional Payments

Land Contract

Borrower Makes Additional Payments

The borrower makes 5 scheduled payments and 2 additional payments. One is to principal only and the second one to principal + interest. Again, by taking a good look at the image we can find all kinds of intelligence information.

This is the first additional payment example in our series of examples/tips. We just haven't had the need to insert a new row because all the previous examples/tips mapped close enough to the due dates.

Notice the Principal only payment in row 15 on 12/07/13. This clearly fell far short of the next payment due date and because the borrower was not in arrears on interest a payment could be made to principal only.

Notice the P + I payment in row 17 on 01/07/13. Notice it was a partial payment and there was unpaid accrued interest. You cannot make a principal only payment when there is interest due. No problem at all. The P + I payment pays off the accrued interest and puts the remaining amount to reducing the Loan Balance — as it should.

Summarizing, a payment to principal only is not allowed if there is unpaid accrued interest. Other than that, they can be made anytime. Again, the payments are simply mapped chronologically exactly as they happened.

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