By Admin on Jan 31, 2010 in Renting & Real Estate
new_mommy asked:
I’m from the Philippines and I want to understand the mechanics of a housing loan which is quite diff in the US. I have a 15 yr loan with a bank but my salary is quite enough to cover the monthly amortization if I restructure it to 5 years. Should I restructure or just maintain the 15 yrs and then save money and pay off some of the principal every yr? I’m on my 3rd yr of payment now and I feel that it’s taking so slow! I need some advice. Also, what fees should I take into consideration if in case I do restructure?
I’m from the Philippines and I want to understand the mechanics of a housing loan which is quite diff in the US. I have a 15 yr loan with a bank but my salary is quite enough to cover the monthly amortization if I restructure it to 5 years. Should I restructure or just maintain the 15 yrs and then save money and pay off some of the principal every yr? I’m on my 3rd yr of payment now and I feel that it’s taking so slow! I need some advice. Also, what fees should I take into consideration if in case I do restructure?
Ideally is to pay up as much of the principal amount as you possible can to cut down on the interest.
SG Elite | Feb 1, 2010 | Reply
Restructuring only makes sense if you get a much better interest rate and save significant money after any fees. Chances are your best bet is to make extra payments and stick with the 15 year loan.
Joe | Feb 2, 2010 | Reply
if you have a low interest rate (which if you got a loan 3 years ago, you probably do) shop around rates. The market has changed over the past year and rates (in most cases) have risen.
Typical advice for a loan with a decent rate is to stay put. You can always pay extra every month towards your principal and avoid the extra interest and reduce the years of payments.
John K | Feb 3, 2010 | Reply
It will be to your advantage to apply for the 5 year loan but you may find your year-end deduction for income tax purposes will be less. You’ll need to decide between the two evils.
Joan J | Feb 5, 2010 | Reply
I would suggest staying with the 15 yr note, and just pay it as though you have a 5 year note (making sure the extra amount every month is applied to principal). That way if you have an emergency and need the money for it, you have the option of making the smaller payment for that month. I am a big fan of having a safety net and that is why I finance the longest time possible and then pay it off as quick as possible. If we so chose we could not pay a car payment for 2 years… It just leaves more options should an emergency arise.
slguldi | Feb 7, 2010 | Reply