Early Mortgage Payoff 2

katharina · #1 02-07-2007, 04:24 PM

Early Mortgage Payoff 2

I hope it's alright to start another thread with this topic. I just found the other one like it closed and I had something to say about it. We'd been talking about whether or not there was a penalty on my mortgage for paying it off early like I'm doing. I'm happy to say I *finally* remembered to look at the papers (hehe Okay, so I came across them by accident!) and there is indeed NO penalty. Whew, that was a scary one there for a while!

Hybrix · #2 02-07-2007, 04:39 PM

I'm not super familiar with this, however it seems to me that there COULD be a penalty in some cases. Luckily yours does not have this, but I am almost positive I have heard of such things elsewhere for other people. Something to do with the bank not making as much as they expected to. Can anybody confirm?

taiarain · #3 02-08-2007, 09:24 AM

I know it's against the law in some states to charge an early payoff penalty.

katharina · #4 02-09-2007, 08:33 AM

Quote:

Originally Posted by Andrew

I'm not super familiar with this, however it seems to me that there COULD be a penalty in some cases. Luckily yours does not have this, but I am almost positive I have heard of such things elsewhere for other people. Something to do with the bank not making as much as they expected to. Can anybody confirm?

I can't confirm with documentation but I know that some people need to pay a penalty, yes. I don't know if laws have changed on that recently or not, but I always thought that paying a penalty (even a stiff one) is still better than letting a mortgage hang on for 30 years if it can be paid off in 10.

Grace · #5 02-17-2007, 06:54 AM

The majority of people stay with the 30 year mortgage. I think only a small percentage pay it off early. Or they refinance it again but don't pay it off earlier.

Taggart · #6 02-17-2007, 07:51 AM

I'm positive that some mortgages have penalties for paying them off early, and that most have some provisions for doubling up payments, or making annual additional payments which reduce the principal, or variations of these features.

Early in our mortgage days, we had a look at charts and realized how dramatically you can save money by prepaying when you can, and increasing the frequency of payments.

katharina · #7 02-17-2007, 03:13 PM

Quote:

Originally Posted by Taggart

Early in our mortgage days, we had a look at charts and realized how dramatically you can save money by prepaying when you can, and increasing the frequency of payments.

It is absolutely stunning, the difference. When I make a payment for principal only, the difference in what goes toward interest and what gets paid on the actual principal in the months to follow always surprises me (the good kind of surprise)

katharina · #8 02-17-2007, 03:15 PM

Quote:

Originally Posted by Grace

The majority of people stay with the 30 year mortgage. I think only a small percentage pay it off early. Or they refinance it again but don't pay it off earlier.

Hmmm.... all the documentation I've ever seen says the opposite of this, that most people work to pay it off as early as possible, even if it's just an extra regular payment once in a while. Thirty years is a devilishly long time.

Taggart · #9 02-18-2007, 09:18 AM

I agree with katharina. I don't think I've ever heard a 30 year mortgage discussed, although in our case we wouldn't have been interested in that anyway because we were so focused on shorter terms.

Penguin · #10 02-18-2007, 10:27 PM

Our mortgage is 20 years. While there isn't an early pay-off penalty, there *is* a sort of penalty... if we want to pay extra in a month, we *must* pay the next month's principal payment in full or else we will have to pay an extra $25 for him to reamortize. (It's owner-financed.)

We do intend to get a conventional mortgage at some point, but have thus far not been able to do so.

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