mortgage payoff questions

[farmgal]

Has anyone offered cash to their mortgage company to payoff their home loan, less than whats owed ? And what were the results? I have many years of interest paid.....lol

What about these mortgage loan modifications? Am I reading the sites wrong or it seems to me they lower your interest rate, add all the forclosure fee's to your loan, among other fee's, and then add time to your loan. this sounds like another trap to me.

I am not in trouble, I just have a few $$ saved and thought I could possibly ditch my mortgage payment, if the bank would take a little less than my payoff amount.

wondering if anyone has tried this on a mortgage, as people do for cc's and what were your results?

[Gercarson]

I think you're going to find this will be a little difficult to do. You see, a mortgage is NOT at all like an unsecured credit card - here they have REAL collateral and the loan is very secure. If you have a clause in your mortgage agreement that will allow you to pay it off "without" penalities then you will not be "charged" anything to go ahead and pay it. BUT, you will not get a deal on paying it off early - this is how they make their money - even defaults are still secured by the house and land. Still, you could try it.

[jen74145]

Watching this one... hey, you never know!

[farmgal]

I designed the mortgage so I have no penalties for early payoff. The difference between a good lawyer and a cheap lawyer...

[stranger]

Originally Posted by Gercarson

I think you're going to find this will be a little difficult to do. You see, a mortgage is NOT at all like an unsecured credit card - here they have REAL collateral and the loan is very secure. If you have a clause in your mortgage agreement that will allow you to pay it off "without" penalities then you will not be "charged" anything to go ahead and pay it. BUT, you will not get a deal on paying it off early - this is how they make their money - even defaults are still secured by the house and land. Still, you could try it.

correct, there is no dickering with anyone who has land and a house for collateral unless we slip into a deep depression, then they may take anything they can get rather than wait and get the property that they couldn't sell for yrs anyway.

[MoonRiver]

In normal times, I doubt seriously if a mortgage holder would go for it. But today, many banks need all the cash they can get their hands on. It certainly is worth a try.

Something else you could try is to get the lowest interest rate loan you can find to make up the difference. Maybe from a credit union or local savings bank. Then pay of your mortgage and just have the smaller, low interest loan to pay off.

[natty threads]

Originally Posted by MoonRiver

In normal times, I doubt seriously if a mortgage holder would go for it. But today, many banks need all the cash they can get their hands on. It certainly is worth a try.

Something else you could try is to get the lowest interest rate loan you can find to make up the difference. Maybe from a credit union or local savings bank. Then pay of your mortgage and just have the smaller, low interest loan to pay off.

I agree.

Banks are ditching foreclosed houses, allowing them to be turned back to former owners, seized for back taxes, and put up for auction and not bid on.

The only problem I foresee is that you are probably up-to-date on your mortgage and thus they'll want you "on the books" as long as possible to maintain an appearance of solvency.

Maybe if you get a couple of months behind then appear uncommitted to keep the property...

*BIG WINKY THINGY*

Do tell how it works out.

I would if I could- I always pay ahead when we get dividends.
Saves on interest.

Bless up.
Love,
Natty

[edcopp]

It's done all the time, BUT not by folks who never ask. It is possible that your lender would give you a discount if you paid them off within say 10 days. You won't know if you do not ask.

Make the offer in writing and with a definate time limit. I would ask them (the lender) how much discount they would give me. Let them make the $ offer. Then if you don't like it don't take it.

If it is 10% off, well where else can you get your money to earn 10%. Oh, and yes I have done this myself for considerably more than 10%.

You won't know if you do not ask, ask, ask.

[Shadow]

Lets see you owe less than the property is worth, you have been paying on time for some time am I correct. Why would they sell a sure thing for less money, perhaps so they can loan it out to someone else at historic low interest No Now if you were mortgaged for more than its worth and behind on the payments and the bank is going to lose a ton of money if they get it back, taking less would make a lot of sense for the bank to take less.
Prepare your self to be laughed at. I would suggest you try it over the phone less embarresed.

[romysbaskets]

You may try anything you like and there is always that chance of a yes. My Father in Law used to say, "Always swing the bat!" Although it appears unlikely as I conferred with a Mortgage broker, why not try just anyway? Now on with the other question on Loan Modifications! Oh yes people get them and I have seen a 4 1/2% loan fixed on a 30 yr note for a sister of mine. She hit hard times when she lost her job. She just went back to what she loved doing anyway but by then she was making less. There was a lag in her income as well. It was down to the wire but she got her Loan Modified to the above. Now for the interesting part, a small fee but the loan was REFIGURED TO THE BEGINNING OF THE LOAN. This means built in equity instead of all the fees her getting into foreclosure had added (they took them back off), no attorney fees etc.... Because she could prove that she could make the payment, had good payment history prior to this loss of income and subsequent lower income following, her modification was granted. She is very happy to have such a low payment now that she can afford. It can be tricky to get one, they are designed for keeping a working family or single individual in their home by lowering the payment to what can now be afforded. The income must be proved to make the lower payment also. Getting into trouble doesn't get you a loan mod. there are qualifying factors you must meet. You are doing great, making your payments and having money set aside. Getting a lower rate is something to work on, not knowing how low your rate already is, but your credit sounds wonderful....

[cowboy joe]

Hmmm...interesting question. Banks / loan companies are usually only willing to negotiate a less than value 'buy out' if the interest rate on the loan is significantly less than the market rate. In all my years of buying & selling real estate, I've only been successful in obtaining a buy out of this nature once, and that was with an interest rate of 2% under market. That said, it wasn't a huge discount but it was cash in my pocket nonetheless. My advice, everything in life is negotiable...you'll never know unless you ask.

[ChristyACB]

Nothing hurts by trying.

Depending on which bank you have a lot of them are overleveraged. While I don't understand every detail, a lot of the brouhaha is that they have more loans out than assets to cover.

Many of them are looking to reduce their rating on that since it is a major indicator of health and makes other customers and investors nervous.

So, even healthy paper is still paper against their assets. I'd give it a shot.

Anyone want to correct me if I'm wrong on that whole situation? It would not be surprising.

[willow_girl]

I'd say you're better off holding on to the cash. Cash is liquid and gives you options during tough times. OTOH, it's not always easy to liquidate property, especially now.

[farmgal]

Its interesting how many people are pestimists here. I am so glad it isnt me. Its very sad. "I cant" is not in my dictionary.

Just for fun, I called my lawyer. He said he is doing this often. He said its called a short sale. And right now banks/mortgage companies are doing it. especially on a house like mine. The bank isnt losing anything. I have a very low interest rate, lower than what people are getting now, plus I have over 10 years paid. and the house has been on the market for years. He also said I would keep all my land, as its in my contract. I get the land for $1, when mortgage is secured. The bank dont want the land. So maybe I save a few more dollars and do it. Or at least I can now lower the price I have on it.

My cousin told me she just knocked $70,000 of the principle off her mortgage and she lives in arizona. The home next to hers is for sale, the price, in 2 years, went from 250,000 to 55,000. Its sitting vacant and vandals have broke some windows. she did one of them mortgage deal refinancing things.

So for all the naysayers... yer wrong!! There is dickering with land and a house in this day and age. houses right now are like cars, they arent worth anything. my lawyers said there has been no better time to do this than now. He said once the republicans get back in office the home values will rise again.

And my question is: has anyone done this?????

[MN Gardener]

You could try it and see! Please also investigate the tax consquences...I believe any remaining balance that they write off will be income for you on your taxes. Although, this still might make it a bargain, talk to your accountant to see what it will do to you.

[Lazy J]

Originally Posted by farmgal

He said its called a short sale. And right now banks/mortgage companies are doing it. especially on a house like mine.

You did not ask about a short sale. You asked about getting a discount for paying off your mortgage early, they are two different things.

In a short sale you are upside down on your mortgage and need to get out, plus if you don't work it properly they can come after you for the balance. I believe the shortsale is noted on your credit report.

You are already getting a 'discount' if you pay off your mortgage early: it is called NOT PAYING INTEREST. Pay it off and sock your payment into savings/ira/mutual funds.

Jim

[whocares]

Talk to your banker, I have a great relationship with mine, I think the bank would rather have a paid in full amount, even if it's less than sales price than to have a forclosure...

Besides, you have nothing to lose by trying, and don't take no for an answer...I negotiated with a finance company for a car, I had the car for 2 years...had some cash and called them up, they said yes in a heartbeat, papers arrived by fed-ex next day, I sent the check and it was a done deal...I owed 9000 and the took 6500 in a lump sum payment, title arrived less than 2 weeks later...It felt great!!!

[dakine]

I agree. Talk with the bank. My dad had the bank offer a discount at 25 years if he would payoff. What we need to understand is how we perceive the money. An amortization schedule does not show ( most of the time) the money a bank makes. A 30 year loan is in profit after 15.5 years (actually 15.523466825 years). The total amount you have paid on the loan equals the amount of the loan at this time. Remember you are paying against the principal AND the interest. Anything the bank collects after this time is profit less costs. It is on paper that the bank says you have paid X$ number of dollars against your house and Y$ against the interest. at 5.5% the bank makes almost the same amount as profit as the amount of the loan. Considerably more profit as the interest rate goes up.

[mowrey1999]

Well anytime you pay off a mortgage early your saving your self money at least in interest you would normally pay to the bank. so if you paid a 30 year loan in 15 you might save your self 50,000 dollars on a 100,000 dollars loan. I paid off a rental I had 2 years ago and asked the same question to the bank manager who said there was nothing they could do except payoff the amount owed at that time .He said they couldn,t modify a mortgage since it is a contract.And the contract was held by someone else ,they only submitted payment to say fannie may or freddie mack. And I wasn,t in any financial trouble so there was no reason to ,I would say if your bank has your mortgage and hasnt sold it off like 95% do you might have some ability to see what can be done but if the loan is sold like most I wouldnt think it could be negotiated, unless you were under water and about to loose it . but its worth a try.

[beaglebiz]

I paid mine off 22 years early, no penalty. I just paid the principal amt due, and I think there was a silly amt they subtracted from the escrow before they refunded the balance (of the escrow).
yes, its nice to have cash. yes, its nicer still to own your own place