What is stopping you from getting a mortgage
Can a US bank prevent you from making early payments on a mortgage to the principal?
Littleadv's first comment - check the note - really is the answer.
But your problem is twofold -
Every mortgage I've had (over 10 in my life) allows early principal payments. The additional principal can only be applied at the same time as the regular payment. Think of it this way - only at this moment no interest is owed. If you try to pay only for the principal a week later, the system will not process it. Pretty easy - additional capital with payment due. In fact, every mortgage I've had that offered a monthly bill or coupon book had that same line of "Extra Fund". I just happened to do this for a mortgage on my rent. I make these payments through my bank's billing service. I have noted the additional principle in the "Notes" section of the virtual exam. However, the note explicitly states whether there is a problem with the prepayment of the principal.
The bigger problem is that your friend wants to treat the mortgage like biweekly. The bank expects the full amount to be paid and is probably not required to Less than to accept the full amount. Given my first comment here above, the plan for your friend to get 99% of her needs is:
- Set aside half the payment when each paycheck comes.
- Make the recurring payment if this is on the pile of saved cash every month.
- Twice a year she receives an additional half payment, ie 1/2 times the amount of money required.
- If (3) occurs, make the payment with an additional principal equal to half the payment. This will happen twice a year and will effectively make 13 full payments per year.
Tell her biweekly isn't anything magic, it's a budget conscious way to send the money, but over a year it just pays 108% of the normal payment. If she wants to burn the mortgage faster, tell her to add what she wants every month, even $ 10, it all adds up.
Conclusion - There are two schools of thought that are either extreme: (a) pay off the mortgage as soon as possible, no debt is the goal, and (b) the mortgage is the lowest interest rate you will ever get on money borrowed. Pay as slowly as possible and invest extra money. I accept and respect both views. For your friend and the first group, I need to add the following: - Make sure you deposit into the appropriate balance in your retirement account to get the full game. $ 1 can be paid on your 6% mortgage or doubled when deposited to $ 2 in your 401 (k), if available. And pay off any high-yield debt first. This should be obvious, but I've seen people keep their 18% card debt while they prepay their mortgage.
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