mortgage/loan question..penalties

ping

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Ok so we are going to try and get a loan to buy a house this year. But I do have a question that I hope someone can shed some light on. Say I am gonna get a 15,000$ loan. And its a 15-yr loan meaning I have 15 yrs to pay the loan off. But say I finish it off in 5 or 10 years instead of 15. How much of a penalty would be imposed?
 

kittenkiya

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Make sure your loan has NO prepayment penalties. It shouldn't cost you anything.
 

lookingglass

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Originally Posted by Ping

Ok so we are going to try and get a loan to buy a house this year. But I do have a question that I hope someone can shed some light on. Say I am gonna get a 15,000$ loan. And its a 15-yr loan meaning I have 15 yrs to pay the loan off. But say I finish it off in 5 or 10 years instead of 15. How much of a penalty would be imposed?
I can't tell you how much the penalty would be, because it's going to vary by the bank, but there are loans out there that don't have them. When you are searching for a home loan bring of list of things that you want. I'll give you an example of what my husband and I are doing:

1. No PMI (mortgage insurance)
2. No prepayment penalties
3. A fixed rate

If the bank isn't willing to give us these things we are going to walk. With the housing market the way that it is banks are going to be a lot more willing to work with you. Remember, most of the employees work on some sort of commission scale.
 
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ping

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Originally Posted by lookingglass

I can't tell you how much the penalty would be, because it's going to vary by the bank, but there are loans out there that don't have them. When you are searching for a home loan bring of list of things that you want. I'll give you an example of what my husband and I are doing:

1. No PMI (mortgage insurance)
2. No prepayment penalties
3. A fixed rate

If the bank isn't willing to give us these things we are going to walk. With the housing market the way that it is banks are going to be a lot more willing to work with you. Remember, most of the employees work on some sort of commission scale.
Ok what is mortgage insurance?
 

sophiec

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Originally Posted by Ping

Ok what is mortgage insurance?
PMI (private mortgage insurance) is what is usually required if you don't have 20% to put up as your down payment. I had PMI insurance because I didn't put 20% down on my house when I bought it.
 

lookingglass

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It protects the bank if you foreclose on your home. They add it into your payments, and depending on the state and the home it can be really expensive. Some loans force you to have it, but others like VA loans don't.

Your best bet is to research what kind of mortgage you want. VA and FHA loans are great for first time buyers, but they can be a pain to get. They require inspections for code violations, and more likely than not things have to be fixed before you can move into the house.




http://www.pmigroup.com/products_mortgage.php
 

gayef

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Originally Posted by Ping

Ok so we are going to try and get a loan to buy a house this year. But I do have a question that I hope someone can shed some light on. Say I am gonna get a 15,000$ loan. And its a 15-yr loan meaning I have 15 yrs to pay the loan off. But say I finish it off in 5 or 10 years instead of 15. How much of a penalty would be imposed?
It depends upon the criteria set forth in the Note. If the Note contains a prepayment penalty, and if you pay it off early, you may have to come up with a percentage of the unpaid balance at the time of pay-off ... most prepayment penalties are anywhere from 1 to 3 percent and apply within the first 2 to 3 years of the loan only on a first Deed of Trust. With the loan amount you are talking about, this sounds more like a Second Deed of Trust, or more commonly called, an Equity Loan or Line of Credit. Check carefully - they may have a prepayment penalty, but more importantly, the interest rate may fluctuate depending on the amount you have outstanding.


Originally Posted by Ping

Ok what is mortgage insurance?
Mortgage insurance refers to a insurance policy that guarantees repayment of a mortgage loan in the event of death or, possibly, disability of the mortgagor. It can also refer to protection for the lender in the event of default, usually covering a portion of the amount borrowed.
 

neetanddave

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We just bought a house in October, and we avoided the PMI and down payment by doing an 80/20 loan. 80% for first mortgage, 20% second mortgage, two payments on two loans. Out of pocket to get us in the house - less than $1000.
 

gailc

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When we bough our house in 1987 we had put 20% down and still had to have PMI!!! It was because at the time due to the area of where our house is there were no comparable homes to appraise it against (weird I know) It was a rural setting at the time and a nicer (?) home than any within a several mile radius.
Of course that has changed now-but yes we had PMI until we refinanced with our bank a couple of years later and it was not longer an issue!!
 
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