Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 03-27-2014, 09:38 AM
 
360 posts, read 770,655 times
Reputation: 368

Advertisements

I recently aquired a decent sum of money - about 1/5th of my overall mortgage balance. I wanted to apply the windfall to my principal, in hopes of decreasing my monthly payment. Upon calling my mortgage company they informed me that such a payment would decrease my overall payment terms - shortening it by a few years, but would not decrease my monthly mortage payment amount.

My question is this: Short of refinancing my mortgage, is there any other way at decreasing my regular monthly payment with this money?

Last edited by sa dave; 03-27-2014 at 09:53 AM..
Reply With Quote Quick reply to this message

 
Old 03-27-2014, 10:56 AM
 
Location: New York
2,251 posts, read 4,900,246 times
Reputation: 1617
My thoughts - it would be poor money management making one large payment into your mortgage. Your lender is correct - it will shorten your term. Not knowing your financial situation, do you have other debt you can pay off? Also not knowing your LTV ratio, interest rate, or current loan terms. You could consider buying down your mortgage balance and do a stream-line (in house) refinance with your exisitng lender. A shorter term, a lower interest rate, possible a lower payment.

Noting a stream line refinance is your staying with your same lender, refinancing with little to no closing costs. Unless you have an extremely high interest rate, I do not recommend refinancing with another mortgage lender because of the cost in equity. Many people are talked into the benefits of lowering interest rate, not relizing what it will cost them. Further compearing the drop in the "Net Effective Increase Rate" by sending extra applied to principle, compeared to the closing costs of a new loan. Again we do not know your current situation with your existing loan.

Another veiw - have you considered investing in yourself?

  • Sending one large payment does nothing for you credit score. By sending extra with your normal payment for 6 to 8 months and continuing, you're reported as more responsible. As a reward your credit score dramatically shoots up. It's not rocket science to understand having a high credit score you 100% pay less in life, contrary with a low credit score you 100% pay more...
  • Have you considered education? Again investing in yourself to increase your knowledgeand make yourself more marketable? So there is more income for your future..: The Future is so bright...
  • Savings - many people talk about the importance of a 401K, which is taxed defurred when making a deposit. Then taxed when you retire. The problem with that situation comparing how the taxes raise every year. It is almost predictable you could be paying more in taxes when you do retire. Another option to look at is Muni's which over time grow tax free...
  • You have a job, which you receive earned income. When your younger it is a fact there are more opportunitys compared to when you are older. Have you considered creating a portfilio of yourself looking at investing so you have residual income for your future?..
The last 12 years have worked with 1000's either looking to pay less, or save what they have.
  • The individuals with better money management skills have more opportunitys and a better quality of life.

Good Luck

Last edited by Modification Specialist; 03-27-2014 at 11:55 AM..
Reply With Quote Quick reply to this message
 
Old 03-27-2014, 11:17 AM
 
Location: Southern California
4,453 posts, read 6,769,723 times
Reputation: 2238
You need to refinance, there is another way, but it is a little complicated.
Reply With Quote Quick reply to this message
 
Old 03-27-2014, 01:29 PM
 
5,340 posts, read 14,084,719 times
Reputation: 4699
From what I know most lenders will "recast" the mortgage if you want. So if you pay it down to say $100k and you still have 20 years left on your current loan, the lender/servicer can take the new lower principal balance of $100k and spread it out over the 20 years you have left at your current interest rate thereby reducing the payment.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages

All times are GMT -6.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top