Every Monday Morning at 8:15am, join me on my Facebook page as I sit down with a local lender, and do a live interview and talk about a Mortgage Tip that may help YOU with your next Real Estate Purchase.
This morning I sat down with Andrew Jallo from Dacotah Bank and discussed loan estimates. You can reach Andrew at 605.692.8600 or Andrew.Jallo@dacotahbank.com. His office is located at 1441 6th St., Brookings SD 57006 or on the web at www.dacotahbank.com.
- Good morning everybody. Shane here, from the Brookings Home Team, powered by Century 21. Monday morning 8:15, on the dot.
- No technical issues or anything this time. And uh, if this guy looks familiar, yes he was with us on Saturday, during our open house. So, we're getting some extra Andrew time here um, in the last couple days. So, with that being said, it's gonna be our Monday Morning Mortgage Tip with Andrew here at Dakota bank. So, we're gonna jump right into it. But, uh I guess before we jump into it, as you jump on here guys, please let us know that you're on. Give us a heart, give us a like. If you do have any questions for us, throw it in the comments. Uh, we'll try to answer it or we'll answer it on our next episode here, so. With that being said, Andrew, take it away.
- Yes. Thank you Shane. So today, we're gonna talk about pre-payment penalties. So, a lot of times consumers are gonna ask, "is there a penalty to prepay?
- Usually, um, the joke we make is if you win the lottery, there's no prepayment, you can pay us off. Um, but the nice thing about it is, consumer purpose real estate loans, you are secured in the fact that, you're protected where there is no prepayment penalty. So, you can always prepay ahead and I strongly encourage it. So when we run examples, I printed this one off of bankrate.com. It's just an example. A $120 thousand dollar mortgage at 4.5%, if you make an extra payment every year. So make 13 payments, and that's just principle and interest, it's gonna reduce your loan down to 25 years and 9 months.
- So, significant savings, about $16 thousand dollars. Typically when I meet with a borrower I say, "make an extra mortgage payment with taxes and insurance." Your escrow, is gonna drop it down that much more even. So, the one thing with this. Let's say you get an inheritance or a large sum of cash, maybe a bonus at the end of the year, and you apply that towards your principle, it's gonna reduce the interest that's accruing. So again, a great concept but you can also contact your servicer. Here at Dakota bank, we're able to re-amortize that loan payment, to reduce it. Which is gonna benefit you rather than having to refinance. So, one thing I say is, once you've built up that savings account, six months emergency savings, anything that you have extra, apply towards your mortgage payment. It's gonna save you on that long run. So, the less interest you pay, the more money in your pocket to be able to use for improvements, vacations, whatever you want at that point.
- When I have people ask me, I usually tell 'em you know, "I've done the 30 year," most of the time
- Your payment is lower, but you can always make an extra amount, so you'll round up to the nearest one hundred,
- Right, yep.
- If you can, and that also helps as well. Uh, and if you do have a slow month or you know, something, you had some extra bills, then you don't have to worry about it. But if you do a 15 month, or a 15 year, I'm sorry. If you do a 15 year, yes you got higher payments you're gonna pay it off sooner but you're, you're locked into those.
- Correct, you're locked in. Especially holiday season, that's when a lot of times consumers call and they're like, "hey I wish I would've listened to you and done that 30 years." So, yeah, like Shane said, you can always prepay extra on that 30 year mortgage. Especially with rates so competitive right now.
- Get in at that 30 year rate but try to pay it off in 15. You're definitely gonna appreciate that.
- You bet. Good information, thank you Andrew for that. Um, and as always, if you have more questions for Andrew, uh you can feel free to reach out to him. Information on the top, on the bottom, on the sides. Wherever your device allows you to see that. So feel free to talk to him, he'll be happy to answer any of those questions, set down with you and see what you qualify for and then come and talk to the Brookings Home Team. We're gonna take you out and uh, look at some awesome homes to see what uh, we can fit you in there. So, thank you again.
- Yes, thank you Shane.
- That is today's uh, it's a beautiful day today. Monday Morning Mortgage Tip. Let's hope that we get a bunch more of these. You guys have a great week and uh, we'll be back next week, or next Monday. Have a great week. See ya.