When you prepay your mortgage you make extra mortgage payments before they are due. Prepaying your mortgage can help you save interest and you can pay off your mortgage sooner. Make sure you find out whether your mortgage has a prepayment penalty before trying to prepay your mortgage.
Invest Or Pay Off Mortgage?
If you have the extra money, is it better to invest it or pay off your mortgage? The decision depends on where the money will go if you want to invest it.
Structuring Real Estate Investment Properties
A real estate investors have created an LLC to separate their personal and business properties. They are having trouble financing due to an increase debt to income ratio. If a large part of your income is from your real estate business or you have enough buildings to affect your income, many residential lenders will have difficulty giving you financing. You should try to find a commercial lender or a residential lender that has extensive experience with people that own many rental properties to help you out in your future deals.
Avoid Prepayment Penalty On Mortgage Loans
A mortgage broker is helping a friend refinance a loan that has a prepayment penalty. Unfortunately the mortgage broker may not have much luck. A home cannot be refinanced or sold within the prepayment penalty period without paying a huge fee. Borrowers should avoid loans with prepayment penalties.
Selling Your Home With Mortgage Prepayment Penalty
When you sell your home you may face a mortgage prepayment penalty if you still have a mortgage loan. In addition you may have to pay taxes on the profit from the sale. To determine the best way to structure a real estate sale when you have a mortgage loan with a prepayment penalty you should contact a real estate attorney and accountant.
Use Investment Property Cash Flow To Pay Off Primary Mortgage
When you buy investment property you want to take in more money than you spend on the mortgage. When you have positive cash flow on an investment property you can take that extra cash and use it to pay off the mortgage on your primary residence. Once you've paid off the mortgage on your primary residence you can save money to use toward maintaining the other properties and eventually buy another investment property.
Owing More Than Market Value Of Home
Owe more than your house is worth? When home debt exceeds home equity, it's a big problem. Economists have predicted this might happen more when consumer start tapping their home equity at the same time home appreciation tapers off or even stops. The best way to get on top of the loan is to spend a year or two making extra loan payments.
Making Extra Mortgage Payments
Is there any advantage of sending half of the mortgage in early every month? Is the mortgage company required to accept the bi-weekly payments? The solution is to send an extra 1/12 payment every month to pay down your mortgage in less time.
Are Prepayment Penalties Worth Refinancing?
If you have a loan with a prepayment penalty, it may be more costly to refinance to a lower rate than to keep your current loan. If you want to refinance, ask your lender if you are eligible for a streamline refinance or a modified mortgage program. Otherwise, shop around with different lenders to find a refinance that will be worth it.
Are Prepayment Penalties Illegal?
Prepayment penalties are illegal in some states, but they are still legal under Federal law. Also, they are only illegal for certain types of loans. As far as owner financing goes, some states permit owners to charge a prepayment penalty, and others do not.If you payoff the loan early, the lender loses the money it would have made in the future. With that in mind, many lenders protect themselves from early prepayments on loans by forcing the homeowner to pay a penalty if he or she decides to pay off the loan before the end of the loan term. These penalties are known as "prepayment penalties."
Prepayment Penalty In Effect After Mortgage Loan Sold
It's generally not a good idea to get a mortgage loan with a prepayment penalty because even if your loan gets sold, the penalty remains in effect. Learn how prepayment penalties are calculated by mortgage lenders. Also be aware that prepayment penalties can kick in when you sell your home at closing.