Why I hate de bankz

BeerCheeze · Posted: Wed, 01 Jun 2005 00:21:36 Post Subject: Why I hate de bankz

Ok.. so as most of you know Misty and I just bought a house (yea for us)... well the bank we have the loan with set us this thing to help you pay off your loan earlier. Here's the plan....

They take your MONTHLY payment and convert it to a BI-WEEKLY payment. They cut it in half, and of course they a few $$$ to each payment because their is a $5.42 monthly participation fee. Plus of course their is a $295 one time enrollment fee.

Their plan would turn a 30 yr loan into a 24 yr 5 month loan. Not bad huh? Pretty good deal... and dam white of the bank for doing that for us.

Hopefully you did some simple math and figured out where this magical savings comes from. A Bi-weekly schedule means you make 26 payments a year (52 weeks a year, `memeber) so what you are really doing is making an extra payment a year, and paying them for the privilege of doing something you could do free on your own. Which if you did, would cut the loan down by about 2 months more than their plan and save us an extra $3700. Also it makes our real monthly payment $163.68 more than what our payment is right now. So if we just instead added that to our payment each month (which we can do by the terms of the loan) we would pay off the loan about 4 months earlier than their plan, and save us an extra $5700 off their plan.

Bang Head

People are stupid!!! They obviously do this because enough people fall for it! Gawd... people fail simple math!!! Bang Head

Spire · Posted: Wed, 01 Jun 2005 00:30:26 Post Subject:

We have had offers like that from all of the lenders we have dealt with.

I guess the reason they offer it is because most of the folks out there do not have the willpower to go ahead and make the extra payment each year, or even the extra principal added to each bill.

It is amazing what one extra principal payment a year will do to the life of a home loan.

We do not have the said willpower to do this, however we have never kept one loan on this house for more than 3 years!!!

It would be stupid for us to throw them more money until we are done refinancing...someday!!!

renovation · Posted: Wed, 01 Jun 2005 00:33:42 Post Subject:

what I'm seeing a lot right now .or should I'm hearing from people i know .is that we=hen they have gone to do a refinance.they are finding that the last time they did it -in the small print is a monster .they are getting hit paying a prem .to get out of the old loan early .and it not worth the differences to get a cheaper new home loan . and if they do the new one will have that in it Sad

Spire · Posted: Wed, 01 Jun 2005 01:32:03 Post Subject:

Yes, early pay penalties are put in place for just that reason... to allow the finance company to make at least a small amount (relative) of cash before you go out and find a better deal.

Rule of thumb I always hear about is, if you can get a whole percentage point less in interest rate, a refinance is worth it... something that is incredibly hard to do in this day and age, they are already at record lows.

BeerCheeze · Posted: Wed, 01 Jun 2005 09:58:01 Post Subject:

Yea, that's the same rule of thumb I've heard.

Because I used my VA benefits there are a lot of loan tricks that they couldn't use on me. Grin

(And I don't have to pay no stink'n PMI)

And probably for the 1st year we are going to make just our normal payment (well I'm rounding it up just a little, but not enough to matter). Then next year after my truck is paid off, I'll roll part of that payment into the house payment, and then when Misty's truck is paid off I'll roll part of that into the house payment. I'm not convinced we can get a better loan, so my goal is just to pay this 30yr loan off in 20 yrs.

FOX · Posted: Wed, 01 Jun 2005 23:03:03 Post Subject:

dont forget the ppl doing that are commission based and getting more commission for doing that lol.... oops i wasnt supposed to say that