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i just got my first home loan in march of 2006 so this is for any newbies out there who may not realize this yet....i sure didnt when i started out! many mortgage companies will not accept less than a full payment regularly. you can pay full payment plus principal - but if you try to pay half & half on your own, you may get burned like i did! after 1 month from closing my loan had already been sold to another bank - and that bank offered a program for bi-weekly payment with a setup fee of "only" $299!!! it aso required automatic withdrawals on specific dates.... well, being the "savingsadvice" junkie that i am, i wanted to avoid the fee and do it myself. a few months into my loan i sent in half my payment through bank of america midway through the month and the other half at the end of the month... flash forward 3 weeks later in the next month. i get 2 very threatening letters in 2 days "demanding" payment on the "late" month. i was sooo mad..i paid it! what were they talking about?? after about 10 phone calls and managers they discovered the 2 half payments had been simply dropped onto principal, leaving my monthly payment untouched. they corrected everything and after they understood what i was doing they offered to start me the biweekly saver for $299. psh. no way.
GLAD i didnt! that was only 12 months ago -- and my loan has NOW been sold to yet another bank. i would be completely out of that 299$ fee if i would have bitten. this new bank company also offers a biweekly setup for a fee. BLEH!
after researching, it seems many many banks now operate like this. i've also read that it is typical for a mortgage to get "sold" many times during a loan life regardless of your record with the company (i have a clean one, never late, always pay more, etc)
You CAN avoid it and still prepay your mortgage if you wish! Those who have heard of biweekly payments - all it does is add one extra month's payment in your calendar year (and thus reduces overal principal and then interest). so to achieve this. just divide your payment by 12 and add that amount to principal for each month. it accomplishes the same thing.
i typically balk at anything that requires a fee
.... theres always an easy way to avoid one if you look for it!
so, in other words, be careful of any extras that might be thrown at you when obtaining your first mortgage! read the fine print and think carefully about whats truly going on!
GLAD i didnt! that was only 12 months ago -- and my loan has NOW been sold to yet another bank. i would be completely out of that 299$ fee if i would have bitten. this new bank company also offers a biweekly setup for a fee. BLEH!
after researching, it seems many many banks now operate like this. i've also read that it is typical for a mortgage to get "sold" many times during a loan life regardless of your record with the company (i have a clean one, never late, always pay more, etc)
You CAN avoid it and still prepay your mortgage if you wish! Those who have heard of biweekly payments - all it does is add one extra month's payment in your calendar year (and thus reduces overal principal and then interest). so to achieve this. just divide your payment by 12 and add that amount to principal for each month. it accomplishes the same thing.
i typically balk at anything that requires a fee
.... theres always an easy way to avoid one if you look for it! so, in other words, be careful of any extras that might be thrown at you when obtaining your first mortgage! read the fine print and think carefully about whats truly going on!
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