Message for Shari and more... - Posted by GREEKVESTOR

Posted by Mr Donald (NORVA) on October 28, 1998 at 17:28:08:

How do you get around the fact that the institutional lender will usually require at least the FULL payment amount for the month when due? Lenders have been known to return payments that are even as much as a dollar short, preferring instead to guard their “rights” under the terms of the Note.

So if you can’t voluntarily make less than a full payment when due at the first of the month, what choice do you have?

Message for Shari and more… - Posted by GREEKVESTOR

Posted by GREEKVESTOR on October 28, 1998 at 02:17:40:

I got your message. Please send info about the property in the Poconos. What’s a 646 exchange?
I do not have your e-address. Make sure you include your e-address.


This is for everyone.
Today, my lender sent me a letter telling what a good boy I’ve been for 6 months, paying my mortgage on time, etc. and how much I deserved to enter their “equity builders” program.
They said that I’m already qualified and all I had to do was to pay a one time fee of $400. After that, my lender would start his “hokus-pokus” and by shuffling around my monthly payments he would eventually reduce the life of the loan by 7 yrs.

Real numbers:

  1. Original loan amount : $214,900 at 30-yrs at 7.875% fixed.
  2. Origination: 1/23/98
  3. Equity builders savings: $94,922
  4. Total payments under original terms: $550,028
  5. Total payments under Equity builder terms: 455,105

Guys help me out…
Is my lender pulling my leg? can’t I save money by doing like an extra payment per year towards the principal?
can someone tell me specifically if he knows of a way to reduce my loan life by seven yrs. or more?

Thank you again in anticipation to your priceless letters!

Re: Message for Shari and more… - Posted by Bud Branstetter

Posted by Bud Branstetter on October 28, 1998 at 16:48:30:

You can also pay an additional $129 dollars a month and save your $400. To figure out how many PMTs add the additional amount to the payment and input into your calculator as PMT then CPT(compute) N and it tells you how many payments it will take. Similarly, input into N the number of payments you want to pay it off in and CPT the PMT amount. Since you have started paying on the loan enter the number of payments as N and compute FV first.

It’s been so long since I did this… - Posted by Soapymac

Posted by Soapymac on October 28, 1998 at 09:08:55:

I don’t want you to totally rely on my numbers. However, the principles are quite sound.

If you changed your budget so that instead of paying your mortgage once a month you paid it you paid half your mortgage every two weeks…you would in essence be paying thirteen mortgage payments a year.

One payment would go directly towards principal. That alone would reduce your 30 year loan to about 23 years.

Get a good financial calculator AND LEARN TO USE IT AS A TOOL. Some on this board will suggest HP calculators, others will suggest TI calcs. Just get one and make it your friend. But I digress.

Another way to really save some money is to get a printout of your payments. The printout should show how much of each payment goes to principal and how much goes to interest. Take the beginning payments. Be sure you make one payment each month. Then, if you want to pay your loan down, take the subsequent payments (the next 2 or 3, for example), add the principal together AND CUT A SEPARATE CHECK to the bank to pay the principal on those payments.

This REQUIRES good record keeping. Make sure how these payments are applied. A banker told me there are FIVE ways that additional monies paid on a loan can be applied. Four of them work to the banks advantage. The fifth one I just told you about.

Lastly, make two mortgage payments a month. Believe it or not, this will cut a 30 year mortgage down to a little over 6 years. A financial calculator will prove that one for you.

Hope this has given you some ideas about paying off your own home. I did not address whether you should do this or whether you should take that money and invest it creatively. I’ll let others step in here for that.