Greg and I are in the process of refinancing our home loan to take advantage of the lowest interest rate possible so that we can pay as much as possible towards principal and not towards interest-you know, to help us pay it off faster . We thought we had a pretty low rate 3 years ago when we purchased our house but they have dropped to historical lows so we wanted to take advantage of that. It’s part of the next step for us to get even more in tune with our finances. So we have the home inspector coming later this week. I was chatting with a friend about the whole process of refinancing and the topic of when the first payment was due came up. She mentioned that her loan officer at the bank she deals with told her that she’d have a months grace period after closing before her first payment was due and that she was excited she didn’t have to make that payment because with the holidays coming up the extra cash would be nice. A huge red flag went off inside my head as she was talking……….seriously? I thought.
Ironically, this morning I wake up and start reading thru the news and I came across and article that is talking about the same thing and confirmed my initial reaction of why skipping a loan payment is BAD BAD BAD…and could cost you thousands of dollars.
Any of you who have gone thru the process of purchasing a home or refinancing a home in the past may know a little of what I’m talking about. When it comes time to discussing when your first payment is due on the new loan, sometimes things can be very wishy washy…..and they may tell you, “oh, you get to skip this month.
Real estate transactions are confusing enough-when to make your last payment on the old loan, when is the payment due for the first loan? Skipping a payment of just $500 on a $100,000 30 year loan is like can cost you MANY of thousands of dollars later. Besides a possible late fee if the loan officer was wrong about your posting date. So even if you are told to skip a payment and there’s no way possible to apply your payment to your loan, save the money and then when you make your first payment….add in what you have saved.
Don’t be tempted to skip a payment….If you’re spending all the time researching to find the best deal, the best interest rate, why would you cost yourself thousands of dollars by skipping a payment.