[wallabee4]

I have a fixed rate mortgage, 30 yrs. No balloon payment.

Monthly payment is $918 but I always pay $1000 each month with the overage I indicate as going to principal, I have no mortgage insurance (as I had 20% down) and I have no escrow of taxes and I always pay it approx a week before it is due. No exceptions. This is now beginning year 7 of the loan.

I have noticed that when I get my annual statement of mortgage interest for tax purposes the amout of interest paid for the year varies greatly. In 2010 I had about $8200, in 2011 $9200 in 2012 $7500 in 2013 $8600 (rounded figures).

I am perplexed as to how on earth I can be paying MORE annual interest (just in the last year $1100 more) when in fact I have a smaller principal upon which that interest is being calculated with each subsequent year? This, to me, seems mathematically impossible. Even if I figure OK some months I may have more days accruing interest depending on what date my payment is received but considering my habit is always to pay a week (or more) in advance of the payment due date I would think that would even out month to month ver 12 months and certainly shouldn't cause a $1000 increase in interest paid.

Is there something about amortization of a loan that I am not understanding?

[ScottGem]

The only thing I can suggest is maybe the dates resulting in interest accruing differently in alternating years.

Do you have Excel? You can use the amortization template to see how the interest payments should go, then go to your lender and ask why it doesn't match.

[wallabee4]

Thank you, Scottgem!

While waiting for answer, I found it myself. I pay roughly $650 in interest each month. What happened is some years my Jan payment if made early got into previous year recorded for end of Dec and sometimes not. In a year where the Jan payment was credited to previous year and the same thing had happened the previous Jan, I was therefore missing or gaining 2 approx $650 interest payments... I went back and looked at all my monthly statements...

This is interesting because if I maximize the interest paid in one year this way in year where I can itemize tax deductions that will increase my interest paid for that year by over $1000... So this was good question anyway, for what it may show others... I guess...

[ScottGem]

That's basically what I was thinking might have happened. However, you can't count on that $650/mth in interest. The monthly interest accrued should decrease with each payment since its based on the outstanding balance. However, some years you may be credited with 13 payments and the next year with only 11. That would count for the difference.

Tax advisors often advise clients to make their January payments early if they need to get an extra deduction for the year. Of course that means the next year you get a lower deduction.