Principal mortgage payments
That logic only applies if you only pay the required amount. However, the possibility is there to shove that banker’s smile where the sun don’t shine. Just keep paying at the same rate as before — making extra principal payments — and you will drastically cut the amount of interest paid over the life of the loan. For example, say you had a mortgage with P&I payment of $1,000.00 per month and were able to refinance to a mortgage with a P&I payment of $900.00 due per month. If you just made that $900.00 payment, then yes, you are making the banker smile. But if you keep paying at $1,000.00 per month, then you are paying down your loan earlier, at a lower rate. If you can do that, then you’re coming out ahead. A 720 credit score is pretty high. You have to have your financial act together. But that’s the way it should be.
Here’s my proposal: If you haven’t missed a house payment in 10 years, the government should pay off your house as a reward for being a good credit minded citizen. What’s another few hundred billion?
Very much not true. I went twenty five years always paying off the credit cards. But in addition to the high emerging interest rates and fees, the credit card company started doing everything possible to trigger the rates and fees.
They began to move the due date. They shortened the period from the issuance of the bill to the due date. They delayed processing of received checks.
So when a check I wrote and mailed two days after receiving the invoice “didn’t make it in time”, the card had extensive travel costs on it for just that month alone of over $10,000. My penalty for being less than a day late (they credited the day it was due, but claimed it arrived after noon)? More than $350 in interest and fees. When the council of residential specialist bill came in late, they not only hit me with fees, they socked me with two months of interest at their higgest rate of 24%. So much for good will to long established customers.
Of course I moved the account. The current card holder gives me 25 days to pay (instead of eight), has a fixed late fee of $25, has a fixed interest rate of real estate Colorado 8%, and readily forgives minor infractions from good customers. Under them the same penalty would have been $25 plus $68 in interest. But because they issue electronic balance advisory, give 25 days to pay, and don’t try to force default – it wouldn’t have happened at all.
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