Posted: 2/4/2009 6:39:04 PM EDT
|
I purchased my first home last July with a 30 year fixed rate of 6.5%. The same mortgage company that my loan is through just sent me an Equity Accelerator offer that would require payments twice a month instead of monthly. It lists the benefits as simplified budgeting, paying off the loan earlier, and having more equity.
It requires a enrollment fee of $295. Is this worth giving serious consideration? |
| SHIT NO! You can send in a separate check every month or whenever you feel like and if it is mark "principle only" it has to be applied towards principle. They can't charge you extra for that. If you are disciplined then that all you need to do. We have a land note through Chase and they made me send checks in at a certain time every month if I wanted them to go towards principle but it is worth it to pay that principle down early. You will save tons. I would not want to be locked into it though in case you lost your income. I would damn sure not pay the 295 either.SS |
I personally have done this twice on a previous house and my current house. Yeah, it does suck to pay $295 up front to do the program and IF you are disciplined enough to make the extra payments, either monthly or at the end of the year you would come out that much ahead. The problem is most people (including myself) aren't that disciplined and despite our good intentions, never pay the extra toward principle. It sure makes it a lot simpler to have half the mortgage payment taken out of my check twice a month than getting hit with the full amount once a month. Much easier to budget and you still make an extra payment of principle ever year. My .02
|
|
Quoted:
SHIT NO! You can send in a separate check every month or whenever you feel like and if it is mark "principle only" it has to be applied towards principle. They can't charge you extra for that. If you are disciplined then that all you need to do. We have a land note through Chase and they made me send checks in at a certain time every month if I wanted them to go towards principle but it is worth it to pay that principle down early. You will save tons. I would not want to be locked into it though in case you lost your income. I would damn sure not pay the 295 either.SS 100% right |
|
On my house payment (through Chase) the monthly statement has a line for extra principal payment. I put 50-150 extra on this each month. the bank puts it to the right place, although i double check on the next statement.
on my car loan through toyota TMCC, they never apply extra towards the principle, it always goes toward the next months payment. so for them i have to send in a different check with principal only on it to get them to allocate it to the right place. on your initial house payments, lets say your first payment is 1300$. at the beginning of your loan you pay $50ish in principal and 1250$ in interest. next month you pay 51$ and 1249$, etc etc as the months go by. now, if at the beginning of your loan, you pay an extra $51 a month, you just saved the 1250$. pretty easy way to save big money, eh? every time you make an extra principal payment, you will in effect keep the interest payment in your pocket. that is a huge deal at the beginning of a home loan. you can do it your self without any enrollment, infact that enrollment fee will cost you several thousand dollars of interest you could save if you just send it to principal yourself. when your house payment gets almost equal principal and interest, it doesn't really save that much money at that point and later. the last 5 years of a loan i would never pay off extra, unless i got down to the end and could do it all in a lump sum. |