Why I Didn't Automate My Mortgage Payment

There's a good reason I pay my mortgage manually each year.

I have automated many aspects of my financial life over time. Most of my bills, including my credit cards and utility payments, are paid automatically out of my bank account before the due date. And I transfer money to saving accounts automatically on payday to make sure I'm meeting my investment goals.

But there's one payment I have resisted automating and instead pay manually each month. It's my monthly mortgage payment.

This is a payment I'll have for a long time, and despite the fact it would be more convenient to have it paid out of my checking account without my intervention, I never plan on setting up automatic payments for it.

Why I've chosen to pay my mortgage manually every month

There are a few big reasons why I've opted to manually pay my mortgage payment and why I'd never automate it.

First and foremost, my mortgage is the only debt I don't pay in full every month. My credit card's automatic payment is set to ensure it brings my balance down to $0. And I obviously pay my entire utility bill and cellphone bill every month.

Since my mortgage is the only debt I carry a balance on, it's the only one I pay interest on. As a result, I want to manually pay my loan each month so I can see exactly how much interest I'm paying -- and what percentage of my payment goes toward reducing principal versus covering finance charges.

Paying attention to the interest costs I face each month helps me see exactly what my home is costing me over time. It enables me to track my progress with mortgage payoff, since each month my interest cost gets reduced and the payment toward principal gets a little higher as my balance goes down. And, since I itemize my taxes and claim a deduction for mortgage interest, keeping track of total interest paid helps give me more insight into what my tax savings will look like.

Another reason why I don’t automate my mortgage payment

There's also another reason why I choose to pay my mortgage manually each month. Some months I opt to make extra payments. Now, I've repeatedly written about why it's not a good idea to pay off your mortgage early since the debt is usually at a low interest rate and you can earn a better return by putting your money elsewhere.

But, despite the fact it doesn't make mathematical sense to do it, I occasionally pay extra on my loan. I'll do this in months where I've made extra money and have already fulfilled my investing and other financial goals. I wouldn't mind being free of this debt faster for psychological reasons. I obviously don't want to do this every month since I know there are better places to put my money. By manually making payments, I have the opportunity to choose when it makes sense to put a little extra toward my home loan.

Now, if these issues aren't a concern for you, then making automatic mortgage payments may be a better choice if doing so makes your life easier. But, just keep in mind, there may be good reasons to pay a little extra attention to the monthly payments you're making with this type of loan, so consider whether manual payments could be a good choice for you too.