Question about mortgage red flags
semi-ambivalent
$300 a month on principal, for years now. We have almost no consumer
debt and live pretty frugally. Recently we ordered a new car, modest
in nature, and will pay cash for it. We've decided to charge ourselves
3.5% for the loan and would like, in addition to making the scheduled
payments to ourselves, take the $300 extra off the mortgage and apply
it to our car loan to "retire" that faster. Then apply it again to the
mortgage.
My question: After so many years of paying the extra on the mortgage,
will its sudden absence be a red flag to the mortgage company? I could
call them and ask but I wondered if just asking would be a red flag.
Any wisdom here?
And thanks,
sa
Default User
> My question: After so many years of paying the extra on the mortgage,
> will its sudden absence be a red flag to the mortgage company? I could
> call them and ask but I wondered if just asking would be a red flag.
> Any wisdom here?
What do you mean by "red flags"? What is it you think will happen, or
not happen?
If you've been doing it correctly, each extra payment has been marked
as going towards principal. Stopping that should not cause the mortgage
holder any problems.
Brian
--
Day 305 of the "no grouchy usenet posts" project
Bill
$300 principal payments each month because doing so reduces their
interest income over the life of the mortgage. My guess is that they
will be happy if you stop.<g>
--
.Bill.
Douglas Johnson
>We have a 30yr fixed mortgage on which we have been paying an extra
>$300 a month on principal, for years now. We have almost no consumer
>debt and live pretty frugally. Recently we ordered a new car, modest
>in nature, and will pay cash for it. We've decided to charge ourselves
>3.5% for the loan and would like, in addition to making the scheduled
>payments to ourselves, take the $300 extra off the mortgage and apply
>it to our car loan to "retire" that faster. Then apply it again to the
>mortgage.
This seems to be some funny accounting to me. You are paying real, out of
pocket interest on the mortgage at, what, 6%? So you are paying that to reduce
an internal, self imposed, 3.5% debt faster? What is the bank paying you on
savings, 1%?
If buying the car reduces your cash position lower than you would like, then it
makes sense to stop the extra mortgage payments for a while. Otherwise, I can't
see it.
>My question: After so many years of paying the extra on the mortgage,
>will its sudden absence be a red flag to the mortgage company? I could
>call them and ask but I wondered if just asking would be a red flag.
While I doubt it would raise any red flags, why do you care? If you are in
compliance with the terms of the mortgage, you can raise enough flags to fill
Red Square and there is nothing they can do.
-- Doug
Douglas Johnson
Actually, whether the mortgage lender hates it or not depends on the mortgage
interest rate vs. the current rate for a new loan. If the mortgage is higher
than the current rate (very likely right now), then the lender hates to see it
paid off. If it's the other way, the lender would like their money back so they
can lend it at the current higher rate. -- Doug
Bill
> If it's the other way, the lender would like their money back so they
> can lend it at the current higher rate.
Very true. I assumed from the oiginal poster's statement that he has a
mortgage "on which we have been paying an extra $300 a month on
principal, for years now." that his rate is likely higher than current
rates. If that is true, he might well save a significant amount by
refinancing at current rates.
--
.Bill.
Wallace
"Douglas Johnson" <po...@classtech.com> wrote in message
news:gr3lh5l5dlvqpkp05...@4ax.com...
Actually, the mortgage was probably sold off, and the loan SERVICER would
hate to loose its servicing fees when the loan is paid off early.