Can you repay a mortage early in the US?

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  1. profile image0
    ryankettposted 7 years ago

    If one was to take a 30 year mortgage for a US property, in order to guarentee that repayments were easily manageable irrespective, yet in reality they could repay over 15 years, are financial institutions open to excess repayment?

    So, if my mortgage repayments were $300 a month, yet on some months I could easily afford $600, would they take $600 and deduct that from the debt? And, if so, is there are penalty for early repayment?

    If you do repay an excess, can you simply reduce your monthly liability over the 30 year term accordingly, yet still take 30 years to repay? So effectively keep a miniscule debt to a lender, but avoid early repayment penalties (if they exist)?

    Your advice is greatly appreciated.

  2. sunforged profile image72
    sunforgedposted 7 years ago

    from my bookmarks, dont know about the site - but the author has some credentials … story.html

    1. profile image0
      ryankettposted 7 years agoin reply to this

      It looks like I need to do some further research, as the basis of that article is the negatives derived from state and federal income taxes. If I remain a UK based UK citizen I would pay US tax on rental income and of course pay property taxes, but my other forms of income would be pre-taxed in the UK. Many thanks for your help again though Sunforged, much appreciated, one day I will be ordering you to Rochester for a pint or two no doubt smile

  3. sunforged profile image72
    sunforgedposted 7 years ago

    You know I have never heard of early repayment penalties here in the US (could very well exist still) and when I searched only UK and AU sites came up -

    Im down for a draft (or 12) in Rochester - will actually be heading up there a few times this month for concerts, as long as we arent bidding on the same houses we should be good smile whenever you make here again

    1. profile image0
      ryankettposted 7 years agoin reply to this

      They are a pain the backside here, it is the banks way of punishing you for getting out of debt. It is of course their intention that every remains in as much debt for as long as possible, not that such a policy has worked for greater society. A friend of mine had to pay several thousand to finish her mortgage a few years early, effectively cancelling out most of the benefit.

  4. wilderness profile image97
    wildernessposted 7 years ago

    Yes, you may repay the mortgage early, with no penalty. 

    No, you may not decrease the monthly payment by paying early; you have contracted for X dollars per month (or more at your choice) and will have to make that minimum payment each and every month.

    Extra monies paid to reduce principle do just that; reduce what you owe. As a result the interest charged each month (X% of the previous months principle balance) goes down as well, increasing the part of the next month's payment that goes to reducing the principle.

    Seven years ago I took out a 15 year mortgage, and by paying some extra each month for the first 3 years I now owe about 5 years worth of payments.  Only one month can I recall actually making a double payment; the extra was usually about 1/2 a payment.

    Care must be taken to make sure the mortgage holder applies the extra monies to the right place (principle) and most banks will require that you make only 1 payment per month.

  5. lrohner profile image80
    lrohnerposted 7 years ago

    Ry-I've written a hub about the different strategies for paying off mortgage debt early. The simple answer is yes -- every little bit helps. But you need to take everything into consideration, including what you will lose in writeoffs, the interest rate you are paying on other debt, etc.

  6. Onusonus profile image78
    Onusonusposted 7 years ago

    I recently refinanced my loan to a 15 year loan, and got approved for 4.0% interest vice the origional 6.5%. It cost $3700.00 in closing costs, and my monthly payment went up $30.00 a month. All in all I saved over $150,000.00.

  7. outlawsphinx profile image62
    outlawsphinxposted 7 years ago

    You may repay a mortgage early in the United States..however. Be sure to look over your loan paperwork to make sure that you do not have a penalty for paying it off early. I personally think that all people should try to get the penalty free option but not all mortgage companies offer that! Of course, they make a great deal more money if you pay your mortgage in the allotted time versus paying it off early.
    If you are able to pay off your loan early than the allotted time, make sure to make a note of how much of your extra payment goes into the principal because if you do not it may simply go into escrow, which they will likely refund to you at the end of the fiscal year, which essentially gets you no where!


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