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When making a Mortgage Loan Prepayment, does it reduce the principle amount you have to pay each month?

admin — Tue, 06 Sep 2011 12:48:44 +0000

Question by Ryan L: When making a Mortgage Loan Prepayment, does it reduce the principle amount you have to pay each month?
Currently I am about to close on a house and have a 30 year fixed rate mortgage. My question is whether paid additional amounts above my normal mortgage payment reduces the amount I will have to pay each month, or whether it just reduces the amount of periods in my loan term.

Best answer:

Answer by pearlmel
yeshere is one example on 150 k 30 yr fixed with a 6.5% ratefirst i must tell you should make an additional payment and tag on check “apply to principle”! this way you have proof and there is no question your intention!ok 150k home making a 150 extra payment every month!pays your home off in 21 years and a 9 months

What do you think? Answer below!

How exactly do ‘interest only’ mortgage loans work? When do I pay on the principle of such a loan?

admin — Mon, 20 Jun 2011 12:49:39 +0000

Question by ronnieD: How exactly do ‘interest only’ mortgage loans work? When do I pay on the principle of such a loan?
I know APR loans are a bad idea, but how would an interest-only loan work? Would it still be a 30 year note, or do they extend the loan? Would I be able to get a fixed rate with an interest-only mortgage loan?

Best answer:

Answer by Miss Emily
Every loan has an APR, what people refer to as “bad” is an ARM (adjustable rate mortgage).An interest just lent is usually amoritized o’er 30yrs. But yes, you are simply paying engaging only & NOT paying anything towards your principal. If after 30yrs. of paying Just the interest on say a $ 100K loan,,,, after 30yrs. you would still owe $ 100K, at which clock you would sell the home or just refinance. Most populate do not pay interest only on the same loan for 30yrs.If you have an interest only loan, it is because you couldn’t afford to pay the principal as well when you first got the loan. You should contact the bank who holds your mortgage note & ask if you have a “pre-payment” penalty OR if it would be OK to make some payments towards your principal.If you’re currently on an adjustable rate interest only loan, it would be break & safer to financed to a fixed loan payment. Even if it is engross lonesome, just make certain you ARE able to, if you want, to make excess payments towards principal.

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Why 30 Year Home Loans Are Being So Popular?

admin — Tue, 17 Feb 2009 09:47:17 +0000

Ray Torres asked:

When my dad bought his home, he went for a 30 year home loan. As a matter of fact, most of the homeowners I know have acquired their home via that home finance offering. But why it has being so popular over the years?

A 30 year home mortgage used to be the first choice of most borrowers, because since the total payments are spread over a longer period of time with the interest rate set for the entire time of the mortgage’s life. 30 year home loan rates are an industry standard but is it the right choice for you?

As we mentioned, the plus side for a 30 year home loan is lower monthly payments. This attraction is somewhat dimmed by the fact that you pay thousands of extra dollars in interest. But, on the other hand, your interest is 100% tax deductible which does lower your after tax cost at the end of the equation. It also offers you some flexibility so that if your financial situation changes and you have more money you can pay it off in less than 30 years, this while keeping the low monthly payments. The fact that your payments might be smaller gives you the option to purchase a larger roomier home.

To show an example of the interest difference between 30 year home loan rates and one of the other rates. On a 30 year, 100,000 dollar loan using 7% interest rate your monthly payment of interest and principle would be $665.30 dollars. Over the next 30 years you will have paid $139,511.04 in interest alone. Now with a 15 year home loan rate on the same amount you will pay $871.11 per month and over the next 15 years, you would pay $56,799 in interest. This would save you $82,712 dollars.

If you have the will power to invest the savings from the monthly payments, it still could be a good choice to go with the 30 year mortgage. Especially if you can find an investment that the long term payoff matches or exceeds what you would save in a 15 year mortgage. Another factor to consider is how fast you want to accrue equity in your home or to own it out right. 30 year home loan rates take much longer to build equity.

30 year home loan rates are certainly attractive and the vast majority of home buyers get 30-year loans because that is the longest home loan available today. Experts agree if they could get a 35- or 40-year loan, they probably would. There are many other options to consider. Probably the biggest question you have to ask yourself when considering a loan is what are your financial goals? What loan plan will help you the most to reach that goal? It is clearly to your advantage to look into other loan options for the best loan available for you and your financial goals. It may surprise you that because of your personal situation there may be other plans more suitable for you, such as a 15 year mortgage, for example.

Before committing to a long term loan, have a clear idea of your financial goals, chop around for alternatives from different lenders and if possible, seek professional financial advice on what best for you. It will be time and resources well spend.

CARLTON