Your Questions About Check My Mortgage Interest

Helen asks…

Extra Mortgage payment?

Let say I borrow $200,000 on a 30 yrs fixed and I make my monthly mortgage payment. At the end of the year, I have some extra money left over, can I put that into the mortgage and pay extra? If yes, how would they recalculate my payments for next year? Is there any fees for this? Do I just send them a check and say put it down on my principal? What about the interest rate?

admin answers:

Your payments are fixed. An extra payment or amount is applied to the principal and shortens the length of the loan. The interest rate is not affected. The total amount of interest can be affected greatly – $1,000 extra paid now at 6% will save $1,800 in interest over the life of the 30 year loan. Most loan payment coupons have a spot in which to write the extra principal payment amount.

Laura asks…

What are my rights when buying a home?

My husband and I bought a home a while back. My husband’s uncle lent us the money to buy a home and we are paying him back with interest. We have always been on time but today he sent over state farm insurance to check the roof. We had a hail storm about a two months ago and he wanted to make sure his roof was O.K. My husband and I felt like he was violating our privacy, he never sent a notice or anything luckily my husband was home sick if not we would have never found out. My question is can they do this or what are our rights basically my husband’s uncle is our mortgage company so do mortgage companies have these kind of rights.

admin answers:

He’s not a mortgage company. He’s a private individual making sure his investment is secure.
A world of difference. If you want to deal with a mortgage company, get a loan and pay him off.

Betty asks…

Is this any grounds to sue this mortgage company?

At the lowest point in interest rates, I struck a deal with a well-known mortgage company for a refi, for a conforming amount. The rate was locked in for a month. I passed credit check with flying colors. An appraiser was sent out by the mortgage company. The house appraised at above what was needed for the 80 percent loan. I had been following the sales in the area including foreclosures and knew the value and the appraisal was right on, from what I could see. On the last day, the mortgage company told me that they had done an internal check of the appraisal — from the company they had sent out, no less — and they had reassessed the appraisal and determined a new appraisal value at significantly less. They said I would have to pay down the loan by $25,000 to get a loan and it would be at a higher rate because it then fell below a threshold of some sort (i.e., the smaller the loan, the higher the rate). By this point in time, interest rates were up so I was furious. I was confident that the value was correctly appraised in the first place. I called the Appraisal Institute and got their designated expert in the area. He came out and appraised the house — at my expense — within two days. It appraised at the same amount as the first appraisal. I sent it to the mortgage company, with a threat. They said they would investigate and review everything. It took more than two weeks. They came back and acknowledged that appraised value was exactly what it had been in the first place. They said they would loan me the full amount as first discussed, but NOT at the rate that had been locked in. Instead, now that rates are 3/4 point higher, they want to make the loan at that significantly higher rate. Since they acknowledged their error, in essence, do I have a case to sue them if they do not stick to their initially agreement — i.e., the locked in amount?? My opinion is that they just wanted an out to the lower rate because I got it on the day it was the 70 year low, and right before rates started up again. Any ideas about that?

Also, they never told me that they do this internal evaluation of the appraisal. All they told me was that the house would be appraised, I would pay for it, and that they would send out the appraiser. It is as if they did not disclose to me the existence of another hoop to jump through. Had I known they had this crazy standard that no other company had, I would have gone elsewhere, that is for sure! Their failure to disclose this in essence added a condition that they did not tell me about. Is that a breach of contract?

admin answers:

Yes, it sounds like you have a pretty good case.

I gope you have this all in writing, it is not an entire verbal agreement, that would be weak, but if they sent this in writing you should be able to force the lower interest.

John asks…

Mortgage Bailout?

OK, it’s not a bailout but the President just announced that the government will offer to refinance high risk loans for people with good credit.

I just got my mortgage last January and understood it to be a fixed rate yet interest only loan. But then I read in USA Today that these are high risk loans too and that the payment will go up when the principal kicks in and the rate can actually change. I realized the payment will go up but I thought I had a fixed rate! Anyway, I have a Countrywide loan and I’m a thinking I better check things out. So before I run off to find a CPA or mortgage expert can any of you tell me if I should be looking into this government refinance? And where do I go to get it? Thanks.

On a separate note it looks like Countrywide is making some drastic moves to stay competitive with the market (borrowing money, laying off %25 of the workforce). But if they go belly up any idea how that will affect me? Thanks again!

admin answers:

Your FIXED rate can’t change, but you have to start paying principle after that interest-only period is over. If your loan was 30 years and you paid interest only for the first 10, now you only have 20 years to pay off your mortgage SO your payments skyrocket.
You’d better be careful with this kind of loan, if you couldn’t afford the house unless you were only paying interest, you shouldn’t have bought one. Now you’re going to wind up foreclosing on your house just like everyone else. Sucks to be you, huh?

David asks…

How do I reduce the number of years on my mortgage?

I owe $126,000 and am approximately five years into a 30-year fixed mortgage. My payment is $1150 a month (most of it interest of course).

I would like to reduce the number of years that I have to pay for this home to 10 remaining. I know that there is a way to make extra payments that apply to principal rather than interest but I don’t fully understand the process. How much extra would I need to pay to meet my goal and what is the process for doing so? Send a check marked “for principal only” two weeks after sending the normal mortgage payment? Will my normal payment be reduced as I pay down the principal?

admin answers:

Here’s the way it works:

Your current payment is based on how much interest you owe on the principal each month, less some amount that goes to principal to pay it down. Your next month’s payment then has a little bit less going to interest, because the principal was reduce slightly the previous month. So, a bit more goes to the principal, paying it down a bit. The amount of the monthly payment is the exact amount you have to pay such that, after the 30-year period, your final payment will be equal to the remaining principal and the loan is paid off.

When you put extra money into the principal (say, pay $1350 instead of $1150), that reduces the principal by an additional $200 from what it would have been had you just made the regular payment. So, the next month, that reduction in principal means that you pay less of the $1150 in interest and even more goes to the principal.

Using a mortgage calculator (assuming you just started the 30-year term and an interest rate of 6.5%), I determined that you would have to make an additional payment to the principal of $700 a month to have that loan paid off in 10 years.

Now, let’s say you come into a lump of cash (say $50,000) and you put it toward the principal on your loan that first month. Your payments will stay the same. But, since the principal is reduced by that $50,000, a lot more goes to principal each month and the loan is paid off in about 12 years

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