Forum Thread

Any chance my bank will let me pay off my morgatge early?

xryanx 59 23 September 7, 2015 at 02:28 PM
Deal
Score
0
2,201 Views

Thread Details

My mortgage is through PNC. I have a checking and savings account with them as well. I refinanced the mortgage through PNC 2.5 years ago, bringing the original mortgage from another bank and going from the 28.5 years I had left down to a 15 year. Fast forward to now, and I've payed the balance down to $100 through a lot of diligence. My next payment isn't due for 7 months as I've made enough early payments. The problem is that the loan has a $350 early pay off fee for pay offs less than 3 years after the origination of the loan. I understand why they do this as they don't want people taking loans elsewhere or refinancing just because rates dropped a bit. I want to go ahead and pay off the last bit, but if I do so in less than 6 months I will have to face the fee. I tried to call PNC and explain the situation. I pointed out that with a $100 balance PNC was generating almost no interest and I'd really like to just pay off my loan. The person I spoke to was obviously a low level person just reading off a script who kept apologizing about the fee but said it was policy. Should I bother trying to reach someone higher up or going to a branch?

10 Comments

1

Sign up for a Slickdeals account to remove this ad.

Joined Jan 2004
L10: Grand Master
14,922 Posts
1,093 Reputation
#2
Quote from xryanx View Post :
My mortgage is through PNC. I have a checking and savings account with them as well. I refinanced the mortgage through PNC 2.5 years ago, bringing the original mortgage from another bank and going from the 28.5 years I had left down to a 15 year. Fast forward to now, and I've payed the balance down to $100 through a lot of diligence. My next payment isn't due for 7 months as I've made enough early payments. The problem is that the loan has a $350 early pay off fee for pay offs less than 3 years after the origination of the loan. I understand why they do this as they don't want people taking loans elsewhere or refinancing just because rates dropped a bit. I want to go ahead and pay off the last bit, but if I do so in less than 6 months I will have to face the fee. I tried to call PNC and explain the situation. I pointed out that with a $100 balance PNC was generating almost no interest and I'd really like to just pay off my loan. The person I spoke to was obviously a low level person just reading off a script who kept apologizing about the fee but said it was policy. Should I bother trying to reach someone higher up or going to a branch?
FYI - Just because you're paying ahead doesn't mean that they aren't generating interest. I once did that and found out the hard way as well. You agreed to a fixed # of payments for a fixed term. They don't readjust your interest just because you happen to have made the payments early. Seems like BS but it is how it was explained to me.

I was informed that if you do get far enough ahead you can pay them to recalculate it but in your position it doesn't sound worth it.
Reply Helpful Comment? 0 0
Joined Aug 2011
L2: Beginner
59 Posts
23 Reputation
Original Poster
#3
Quote from LivninSC View Post :
FYI - Just because you're paying ahead doesn't mean that they aren't generating interest. I once did that and found out the hard way as well. You agreed to a fixed # of payments for a fixed term. They don't readjust your interest just because you happen to have made the payments early. Seems like BS but it is how it was explained to me.

I was informed that if you do get far enough ahead you can pay them to recalculate it but in your position it doesn't sound worth it.
You could be right, but looking at my loanbalance, it isn't really changing but 1 cent every so often.
Reply Helpful Comment? 0 0
Joined Nov 2005
L10: Grand Master
25,041 Posts
3,353 Reputation
Pro
#4
Sounds like you are less than 6 months away from paying the "ETF" right? Just let it sit for 6 months then pay it off without consequence.
Reply Helpful Comment? 0 0
#5
Quote from Dr. J View Post :
Sounds like you are less than 6 months away from paying the "ETF" right? Just let it sit for 6 months then pay it off without consequence.
Yeah... I don't see why this is an issue.

Personally, I am not in favor of paying off reasonable fixed rate mortgages early anyhow... as you generally get "loaned" the money far cheaper than most alternative investments you could make.
Reply Helpful Comment? 0 0
#6
Quote from xryanx View Post :
My mortgage is through PNC. I have a checking and savings account with them as well. I refinanced the mortgage through PNC 2.5 years ago, bringing the original mortgage from another bank and going from the 28.5 years I had left down to a 15 year. Fast forward to now, and I've payed the balance down to $100 through a lot of diligence. My next payment isn't due for 7 months as I've made enough early payments. The problem is that the loan has a $350 early pay off fee for pay offs less than 3 years after the origination of the loan. I understand why they do this as they don't want people taking loans elsewhere or refinancing just because rates dropped a bit. I want to go ahead and pay off the last bit, but if I do so in less than 6 months I will have to face the fee. I tried to call PNC and explain the situation. I pointed out that with a $100 balance PNC was generating almost no interest and I'd really like to just pay off my loan. The person I spoke to was obviously a low level person just reading off a script who kept apologizing about the fee but said it was policy. Should I bother trying to reach someone higher up or going to a branch?
I'm assuming this is a home equity loan. Is it a line of credit? If so, usually you can pay it down to zero, but not close it out and be fine.
Reply Helpful Comment? 0 0
Joined Aug 2011
L2: Beginner
59 Posts
23 Reputation
Original Poster
#7
Quote from Shadar View Post :
Yeah... I don't see why this is an issue.

Personally, I am not in favor of paying off reasonable fixed rate mortgages early anyhow... as you generally get "loaned" the money far cheaper than most alternative investments you could make.
It isn't the end of the world or anything, I just kind of wanted it to go away. I'm also looking at buying a rental property and wasn't sure how having an outstanding loan might affect that process.

Quote from Boomancini View Post :
I'm assuming this is a home equity loan. Is it a line of credit? If so, usually you can pay it down to zero, but not close it out and be fine.
It was called something like a "Rapid Refi Home Equity Loan"
Reply Helpful Comment? 0 0
#8
If it's an installment loan, and there's less than 10 months of payments left on the balance, it shouldn't count towards your DTI when applying for a new loan on an investment property. Sounds like the best thing to do is just wait it out like others suggested.
Reply Helpful Comment? 0 0

Sign up for a Slickdeals account to remove this ad.

#9
It may vary state to state, but I believe pre-payment mortgage penalties are illegal in many states. Either way, you should always check that when applying and when you make an additional payment, you must always explicitly state that the payment is to go directly to principal and not be considered an early payment of the next month's payment. Making one extra payment directly to principal each year on a 30 year fixed mortgage will reduce the term to something in the neighborhood of 24 years (give or take) I believe.

As to this situation, I would not sweat it since the amount left is so small. It is not worth the trouble unless I am missing something.
Reply Helpful Comment? 0 0
Joined Nov 2008
3d20 +5 Sword of Stacking
4,097 Posts
3,681 Reputation
Pro
#10
Quote from xryanx View Post :
It isn't the end of the world or anything, I just kind of wanted it to go away. I'm also looking at buying a rental property and wasn't sure how having an outstanding loan might affect that process.

Happily, nothing to worry about. Such a low outstanding balance won't have any impact on applying for a new loan
Reply Helpful Comment? 0 0
#11
You're better off going to a branch so you could personally explain it to them and you could see if the person you're talking face to face isn't reading a script LOL (kidding aside) I would suggest going to the branch.
Reply Helpful Comment? 0 0
Page 1 of 1
1
Join the Conversation
Add a Comment
 
Copyright 1999 - 2016. Slickdeals, LLC. All Rights Reserved. Copyright / Infringement Policy  •  Privacy Policy  •  Terms of Service  •  Acceptable Use Policy (Rules)  •  Interest-Based Ads
Link Copied to Clipboard