NO POINTS NO COST LOAN

From: BOB FORD <BOB_FORD@compuserve.com>
Subject: NO POINTS NO COST LOAN
Date: Sat, 31 Oct 1998 10:34:34 -0500

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>From: hic@world.std.com (Howard I Cohen)
>Subject: Re: NPNC -more numbers/Reply       =


>If you do get serious, however, be sure to confirm that there is no =

>penalty for early payment,

Excellent idea.   Here is a negotiating tip you should try.  If you
KNOW you will not pay the loan off early, tell the mortgage broker
that they can have the prepayment penalty ONLY if they lower the
interest rate by one fourth or one half a point. Remember every =

clause in a mortgage is a profit center for someone.  A prepayment
penalty is a profit center for the lender.  Since they are making
more profit if the mortgage has a prepayment penalty, they should
give you something in return for allowing them to have it. =


My favorite technique is to tell the mortgage broker that they can
have the prepayment penalty if they remove the due on sale clause. =

I tell them it is either that or a lower interest rate to have it
included. I point out to them that they can make more money when
they sell a loan with a higher interest rate so it is in their best
interest to remove the due on sale clause rather than lower the
interest rate.  In reality, removing the due on sale clause is worth a
lot more money to the borrower than a slightly lower interest rate. =

The reasons for this are complicated. If anyone is interested, send
me a private e-mail and I will explain it.

> and find out the bank's policy regarding recomputing the
>amortization schedule if you pay down the principal faster than
>scheduled. That insures no surprises if you opt for a long term
>loan but  plan to pay it off faster. =


When you get a home loan, the lender and you agree on a longest
amortization schedule and a minimum monthly payment.  This
means that if you make only the required minimum payment on the
loan, the loan will be paid off in X years.    The amortization time
can only be changed by the BORROWER, not the lender.   If the
borrower want a shorter amortization schedule, he/she can pay
more each payment.  A lender can not keep you from paying off a
loan faster if you want to.  The only thing a lender can do is charge
you a prepayment penalty if you have agreed to one when you got
the loan.   =


When you are looking for a home loan, you should check with
mortgage brokers, mortgage bankers, banks, credit unions, and
Savings and Loans.  All of the above organizations do not normally
keep the loans they make.  THEY SELL THE LOANS and they
sell the loans to the same organizations.  If you find a lender
quoting you a loan rate much lower that the competitors, something
is wrong. Beware.
 =

BOB FORD
BOB_FORD@COMPUSERVE.COM

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