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Replies (5)
- Bill Black MLO-49242, "Lowrates4u"
- Contributions:12
You should have no problems paying the $200 additional monies toward principal as I usually see a "no more then $5000 above principal" There should be more info that states the length of term of the prepay along with the penalty itself. It's usually 6 months of interest payments so it does'nt matter where the balance will be... Hope that helps.
Bill
- Brian Walek, "Mr. Mortgage"
- Contributions:16
Your prepayment will go directly to PRINCIPAL. When making your monthly payment, your coupon will usually have a place to write in the additional principal you wish to pay. Paying principal does not allow you to skip payments. It only pays down the balance faster, speeding up the amortization schedule. Some lenders may require you to send in a separate check for large principal reductions. When you make your regularly scheduled payments - those apply first to interest,then principal. ALL additional payment go to principal.
- ksh1bt
- Contributions:3
Thank you all for your responses.
Bill: "What is no more than $ 5000 above principal ? " Are you saying that there will a limit or prepaytment ? I have a 30 YR fixed loan, there is no prepay fro mwhat it says above.
Brian : So basically what you aree saying that I cannot skip any paymenys because ofthe extra payments I make, The principal reduction will only lower the payments fro mthe end of the towards upwards. ? Correct me If I am not wrong.
PS: Can you also let me know about some correspondent lenders on the other post.
- Martin Wareing, "Martin Wareing"
- Contributions:3772
ksh,
You have a "Plain Jane" Vanilla loan and can prepay any amount at any time without penalty. All of the language you are/were quoting is just YADA YADA.. When you redice the balance, the lender will NOT reduce the orignal amortized payment and future payment "regular" or not will simply put you on a faster track to financial freedom. In the event of large prepayments of principal, it is wise to notify the LENDER as they do not automatically apply it to principal without your direction and it "sits" (not for long) in a "holding type" section and is apllied 1st towards a negatvie escrow situation first and then the principal. Just tell 'em where to apply and you'll have ZERO problems. As far as Bill reading into a $5,000 above principal statement you did not put in your original question and there is not a prepay from what it said above so don't know how anyone dreams up or potentially asnwers issues not present. Good luck ot financial freedom. I'll give a little feedback on Correpsondent Lenders over there.
- ELender
- Contributions:1479
You need to call your current servicer and ask if they will re-cast your loan....
BORROWER’S RIGHT TO PREPAY
The following is the text on my mortgage note. Can someonme pl. letm e know the meaning of the later part.
Say I decide to prepay the loan say in 1 year with 300K on a loan of 400K , will the 300K first be taken towards the interest remaing o nthe loan or wil lit all go towardsthe principal.
How does monthly extra payments go say if I add a monthly $200 on top of my monthly mortage payments , wil the $200 go towards my princiapl or interest or pasrt principal and part interest ??
Pl. educate me.
4. BORROWER’S RIGHT TO PREPAY
I have the right to make payments of Principal at any time before they are due. A payment of Principal only is known as
a “Prepayment.” When I make a Prepayment, I will tell the Note Holder in writing that I am doing so. I may not designate a
payment as a Prepayment if I have not made all the monthly payments due under the Note.
I may make a full Prepayment or partial Prepayments without paying a Prepayment charge. The Note Holder will use
my Prepayments to reduce the amount of Principal that I owe under this Note. " However, the Note Holder may apply my
Prepayment to the accrued and unpaid interest on the Prepayment amount, before applying my Prepayment to reduce the
Principal amount of the Note. If I make a partial Prepayment, there will be no changes in the due date or in the amount of my
monthly payment unless the Note Holder agrees in writing to those changes."
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