Can I pay off my loan ahead of schedule? When one sends extra money, do you have to indicate where it goes?

Asked by Trulia New York, New York Thu Feb 28, 2013

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Michael Denn…, Agent, Queens, NY
Sat Mar 2, 2013
The most prevalent loans of the last few years such as FHA, VA and conventional loan products allow prepayment without penalty. However, if you have a loan that is not insured by the government (FHA and VA) or purchased by Fannie or Freddie (conventional), then you may have a prepayment penalty. It's best to call up the customer service dept. listed on your statement to find out the terms or refer to your mortgage note for specific loan terms. Any payments towards principal should be clearly indicated as such. For more info or assistance, I can be reached directly at 917.699.0183.

Michael Denniston l Cell: (917) 699-0183
Residential Home Funding, Corp.
Licensed Mortgage Loan Originator l Sales Manager
6901 Jericho Turnpike Ste. 219 | Syosset, NY 11791
Main: (516) 605-1733 | Fax: (888) 881-2557
NMLS # 24076 | Company NMLS # 34973
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, ,
Tue Mar 5, 2013
For the majority of loans in NY, there should not be a pre-payment penalty involved, especially for a standard conventional or government loan. Typically, any overage on payment sent to the bank will automatically be applied to principle, but to be safe, point out it is to be applied directly to the principle. Also, some banks offer a recast option on your payment depending on how much you are going to send towards the balance. This option will adjust your monthly payment according to the new balance of your loan after the principle reduction, typically for a small fee. Call your customer service to find out if it is offered if interested. For any other questions, feel free to give us a call.

Mark Setaro - NMLS #8579
Vice President, Mortgage Links, Inc.
2043 Richmond Ave., Staten Island, NY 10314
(718)494-0900 Fax
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Christopher…, Agent, Tarrytown, NY
Fri Mar 1, 2013
The ability to pay off a loan ahead of schedule depends on the loan you have. Only the mortgage professional will be able to tell you. Typically the bulk of your payment goes towards interest and the remainder towards your principle. If you have an interest only loan you can make extra payments and have them directed towards your principle.

Christopher Pagli
Accredited Buyer Representative
Licensed Associate Broker
William Raveis Legends Realty Group
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, ,
Thu Feb 28, 2013
Yes, you should indicate "towards principle". Otherwise they may apply it towards interest which isnt as beneficial as if it goes toward principle.
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