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My mortgage broker is telling me that we cannot do bi-weekly payments and that there are no extra payments allowed to the prinicipal of our mortgage, but yet, we can refinance or pay off in full at any point without penalty...does this make any sense and is this allowed? I am really starting to question this guy...
Please Help
Find out which lender he is brokering the loan to and call them to ask if they have a true bi-weekly payment program.
What most borrowers get when they convert their loan from monthly to biweekly payments is a pseudo biweekly (or standard biweekly) payment plan. On the pseudo biweekly, the biweekly payments are credited to an account managed by your lender. Once a month, as with standard payments, the monthly payments are made out of that account. The excess amount accumulated in the account by the end of each year is equal to a full monthly payment. At this point your lender makes a double payment.
In order to set up a true biweekly (or simple interest biweekly) payment schedule, you must have a lender that will immediately credit each 1/2 monthly payment upon receipt. The lender must calculate interest for two-week intervals and apply the biweekly payments less the interest to reduce principal every two weeks.
I have NEVER heard of that before! I would be very leary of going with a company that didn't allow me to pay off principal whenever I wanted to (even if not in full.)
I agree with DawnW. That sounds sketchy to me. If you have good credit, etc., you might consider going with a mainstream lender and a loan with conventional terms where you're free to make payments as you like.
The real estate author Robert Bruss suggests that rather than sign up for a biweekly payment program, simply make an extra payment each year that goes completely toward paying down the principle (or divide up the extra payment and add it to each monthly payment). You'll be paying the same amount as with the biweekly program (26 1/2 payments are the same as 13 full payments).
How are you certain that there isnt a pre-payment penalty?
Has this been disclosed to you on paper?
If it hasnt...then i would quickly walk away.
Most lenders charge upfront to do a bi-weekly program.
Dont ask me why...they just do.
Remember to print PRINCIPAL PAYMENT on the Memo line of every check you send for payment. Make sure it's a different check also.
You are able to make 1 extra payment per year, and it should have the same effect. If this is your first home...i would recommend saving the money or paying off other debt. Mortgage interest, and Mortgage Insurance is tax deductible. Credit cards, car loans, and student debts arent listed for tax benefits.
I've posted this link in a few other posts, but it's probably the most eye opening article I've ever read when considering making "extra" payments towards principal.
If you do choose a bi-weekly payment be sure they do like price999 stated. Recalculate your interest every two weeks based on the new balance.
I've posted this link in a few other posts, but it's probably the most eye opening article I've ever read when considering making "extra" payments towards principal.
If you do choose a bi-weekly payment be sure they do like price999 stated. Recalculate your interest every two weeks based on the new balance.
stay away. go to wachovia or bak of america or suntrust ect. do not del with a broker. they are not all bad but if you have decent credit, even if you dont go to a bank first.
i'm not sure how to read that, but what experiences have you had with a broker that makes you feel this way? I have worked in a Bank, and things can change just as much with the broker.
When you go to a bank for a loan, and the loan goes bad (normally 1week before closing), it's hard for the bank to find you another product.
While working at a bank, I would send out the loan documents to another state (VA) while i was in NC. The underwriter was in Tampa, FL, so the loan docs has to be sent there as well. This is 3states dealing with 1 loan package. This is why you find out that you're 'approved' for a loan maybe 1week to a few days before closing.
If you're denied, then you will need to 'start' the WHOLE process with another bank. Good luck explaining this to the seller. Good luck on also trying to close less than 30days with most banks.
There are a lot of brokers who can close btwn 10-20 days.
If you go with a reputable company, then you will have less worries.
I work for one of the top 3 brokers in the US.
Allied, Carteret, and 1st Metropolitan.
I have over 300 lenders that can give me different rates, costs, and turnaround time. Believe it or not, I work with every major bank in the United states. These major banks provide higher rates than other wholesalers like Taylor Bean & Whitaker. Taylor Bean doesnt have a retail arm, and it only works with brokers. I did a closing for a gentleman for 6.875%, and he had a 500 credit score. (FHA loan)
Just my .02 cents.
Quote:
Originally Posted by robz
stay away. go to wachovia or bak of america or suntrust ect. do not del with a broker. they are not all bad but if you have decent credit, even if you dont go to a bank first.
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