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What Hope For The First Time Home Buyer?
By Richard Cohn
First time home buyers across the globe are feeling the pinch as property prices continue to rise. From America to Australia and Spain to China the total value of residential property in the Read more...
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Smart Home-Buying: Independent Home Inspectors Work For You – Not the Realtor
By Rick Zwierzynski
Who Needs a Home Inspection Anyway?Buying a home is one of the most important purchases you will make in your lifetime, so you should be sure that the home (house, condo, townhouse) Read more...
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The Never Ending Treasure Of Home Remedies
By Javier Fuller
Most of the Allopathic treatment options are very costly and often result in dire consequences due to side effects. In such a situation home remedies offer you safe and cost effective options of Read more...
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Home is an paranoid, comic, hour-long television film made by the BBC and directed by Richard Curson Smith. He adapted it from a short story by J. G. Ballard in 2003. The plot follows a middle class man who chooses to abandon the outside world and restrict himself to not leaving his house, becoming a hermit. He soon starts to destroy his furniture to rid his life of clutter.
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Prepayment Penalties Erode Your Worth, Home That Is!
By Joe Lane
When a buyer gets involved with buying a home, thoughts usually tend to center on staying in that for a lengthy period of time, building both a family and equity. However, as we all know, your life can change in an instant and you never know when the next great job offer or life change will be presented, prompting you to leave town and seek a new beginning. It is those opportunities that prepayment penalties prey on and you should be well aware of what you’re getting in to if they are a feature of your mortgage.
Prepayment penalties typically state that if you decide to pay off the balance of your mortgage within a period of time (generally a few years from the start of the mortgage), you agree to pay a sort of penalty that is usually derived as some percentage of the interest on your mortgage over a period of time. The penalties serve loan agencies well as they seek to get some profit out of your loan even though an owner has decided to end it early, but they do a disservice to the owner.
Naturally, you should be aware of all of the aspects of your loan, but the section discussing prepayment penalties is perhaps one area to pay special attention to. These penalties can cost as much as a handful of monthly payments, so they do represent a significant cost. Every loan is negotiable and it is up to you and your realtor to make prepayment penalties at the very least a topic of discussion.
Much of the time, eliminating
the prepayment penalty from your loan may be too difficult or the bank may ask for too much in return, so negotiating down the lengths and amounts involved could be a workable solution for both sides. Negotiating a smaller window of penalty or a smaller amount of penalty can at least make you feel that you’ve addressed the situation and if you negotiate down the window enough, can probably make you feel safe from having to pay a penalty.
If you are currently paying on a mortgage with a prepayment penalty and have a lot of that time window left to go, you may think about getting creative with how you deal with the penalty should you have to endure it. If you have a new with new financing set up, you can elect to roll that prepayment penalty cost into the amount of your new loan to possibly get interest benefits if rates have gone down.
You can also contact your lender or real estate agent if the window is close to expiring but not fully up to see if the cost can be waived and, if so, what the bank would want in return. Perhaps financing a new property through the same bank will entice them to waive the prepayment penalty in favor of getting your repeat business. You’ll never know until you ask or your realtor pursues the matter, so it is always best to at least give it a try.
As with every step of the buying and ownership process, having full information with leave you better equipped to make decisions in the future. There are hundreds of little items that must be at least thought about and the presence of a prepayment penalty in your mortgage is one such item. Ask the right questions and make some attempt to negotiate down the terms of the penalty if your lender insists on making prepayment penalties a part of the mortgage. You’ll be glad later if a life-changing opportunity comes along later and you are free to pursue it without enduring the added cost of mortgage prepayment penalties.
Published by Joe and Colleen Lane, Realtors®. The Lane Real Estate Team services Tri City Wa Real Estate, Kennewick Wa Real Estate, Pasco Wa Real Estate, Richland Wa Real Estate, and surrounding Southeastern Washington Communities. Here is more information: www.joelane.com/
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