the amount of interest charged every month thus reducing the term of the loan and the total interest charged over its life. Another way of reducing interest is through a system of making 13 payments in a year instead of 12. This is part of shopping for a mortgage. Some mortgages have a flexible policy, which allows you to make extra payments as you consider fit and without restrictions. In other cases, however, the terms of overpaying a loan are strict and may require a penalty for those who are planning on prepaying the mortgage. (most loans today do not have a pre-payment penalty) If you do have a loan with a pre-payment penalty, the terms are detailed in the prepayment penalty disclosure section of the documents. Be sure to examine the documents carefully. If your loan allows for prepayment without a penalty (which almost all do these days), make sure you check with your lender or loan servicing company as to the procedure on how to send in extra payments. Some lenders take extra money sent in and put it in a “holding account” called “unallocated funds”. The money then sits in this account until a full payment is reached and then the lender simply applies it to the next payment. This will not save you any money. Make sure you find out how to have any prepayment amounts directly and immediately applied to the principal balance of your loan so that future interest calculations are reduced.
THINGS THAT CAN DISRUPT YOUR DEAL
Until the closing statement is signed by both you and the seller and you receive the deed and the keys, nothing is certain. The deal might fall apart from one day to another. Here’s a list of common mistakes buyers make that can turn a loan approval into
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