Love and Debt: Why you need to talk about money Valentine's Day On A Budget What Will You do With Your Tax Cut? How to Stop Living Paycheck to Paycheck Setting Financial Goals for the Year Ahead Financing last-minute Christmas gifts Your Credit and the Holidays Where to go for mortgage and debt help What You Should Know About Debt Settlement Create a plan to deal with medical debt Options for Higher Education Back-to-School Strategies for Staying Out of Debt Will Changes in Credit Reporting Affect You? What to do if your medical bills are turned over to collections What to do if your spouse can't pay his or her bills What to do when a family member ruins your credit Homeownership is possible What you need to know about the IRS and collection agencies Will being turned down for a store credit card hurt my credit? Beware of credit repair Debt Management versus Debt Settlement How to get ahead of late fees Is There a Service That Helps You Not Pay Bills Is a Debt Owed Patience is the key to furnishing a new home How to split expenses with your partner Will my boyfriend's bad credit affect me? Tax filing options to consider What to do if your account is turned over to collections Celebrating Valentine's Day on a budget Personal Credit and Starting a Business Finding Money to Reduce Your Debt and Improve Your Credit Simple Keys to Personal Finance Be vigilant to avoid telephone and internet scams Debt Settlement Understanding credit utilization Setting New Year's goals that you can keep The pros and cons of skipping a payment Strategies for Financially Surviving the Holidays Creating a fun and memorable holiday on a budget Keep an open line of communication with parents about their finances. Make a Choice to Get Ahead Financially What to do when a relative asks you for money Should You Buy a Home Now or Wait? The difference between debt settlement and debt management Tax Refund Delays for some in 2017 The negative impact of paying a payment 30 days late Stressed by Finances How to navigate two significant financial decisions: starting a family and buying a home How to advise someone close to you who is coming into a significant amount of money Make a Conscious Decision on How to Spend Your Money Tips for Back-to-School Shopping How do you know if you have a good credit score? Americans spend more money eating out than on groceries Having Good Credit Saves You Money Developing good money habits with your first job How to save for a home How to Know if you are Ready for Home Ownership When is the right time to buy a home? You can improve your credit to buy a home Plan a Memorable Vacation Without Incurring Debt The Hidden Costs of Payday Loans Be Wary of Credit Repair Services Use Caution when playing the credit card game What does it mean to say bankruptcy gives you a clean slate? How your credit is affected by various debt options Be wary of predatory small business loans What to do if you fall behind on mortgage payments Financing a College Education Money, Credit and Relationships Should you be concerned with your date's credit scores? Best options for a small, short-term loan How to help a relative who is always borrowing money from you Setting New Year's goals that you can keep Making the holidays memorable for families on a tight budget. Skipping a Payment over the Holidays What to do if you are overwhelmed by medical bills Make your financial intention a financial goal you can achieve Should Consumers Use the New EMV Cards? What to do when a collector calls you The difference between paying bills and managing your money My wife and I have gone through some tough financial times, which eventually led us to file for bankruptcy. Following this experience, I don’t ever want to use credit again, but my wife What do I need to know to pay ahead on my mortgage? What to do if you get an unsolicited credit card in the mail What to do when moving in to share expenses doesn't work out
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What do I need to know to pay ahead on my mortgage? A. It’s great that you want to pay extra on your mortgage and reduce the amount of interest you will pay over the life of your loan. The first thing you need to do is pull out your mortgage documents. You need to make sure you don’t have any pre-payment penalties attached to your loan. So read your documents carefully to ensure that your loan allows you to make extra payments. If you are unable to locate your mortgage loan documents, call you lender. The easiest way to make an extra payment is to add it each month to your monthly payment. Your lender should allow you to dictate how you want the extra money to be applied. If you aren’t explicit, your lender will probably put the money into your escrow account. So if you want the extra amount to be applied to principal, you need to say so. If you are making your payment online, many lenders make it easy for you to add the extra amount and state how you want the extra applied. You can save thousands of dollars in interest on a mortgage loan by paying an extra $50 a month on your loan. You can increase or decrease the extra amount you pay each month, as long as you make the full monthly payment. Some lenders offer a special program or service where you make a payment every two weeks, and it is applied to your mortgage. There is often an enrollment fee for this kind of a program. To make this work, you will have to make half a payment two weeks before your total payment is due and the other half by the payment date. In essence, you will be making your payment early. You need to make sure the payment is applied every two weeks to your mortgage and that it isn’t sitting in an escrow account until the full payment is available. Recently, Paymap Inc., a Colorado payment processing company, was fined a $5 million and ordered to pay $33.4 million to consumers who had entered their Equity Accelerator Program. Paymap withdrew money every two weeks from consumers’ accounts but did not send the payment immediately to the lender. Instead, Paymap put the money in a custodial account and paid the mortgage on the original monthly schedule. Consumers paid $295 to enroll in Paymap’s program, but didn’t save money on their mortgage, as promised. If you opt to enroll in a service that handles your payments, you need to make sure those payments are applied to our loans as they are supposed to be—having online access to your accounts can make this easier than it once was. As long as your mortgage loan allows you to make extra payments, any extra money applied to your principal will reduce the total interest you will pay. Bonnie Spain is the executive director of the American Center for Credit Education and Consumer Credit Counseling Service of the Black Hills. For more information, email acce@acce-online.com.
The material in this transmission is provided for personal, non-commercial, educational, and informational purposes only. ACCE makes no representations or warranties with respect to the accuracy or completeness of the contents of this transmission and assumes no responsibility for errors, inaccuracies, omissions, or any inconsistency herein. You should consult a professional where appropriate.
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