I have a $190000 mortage with Ohio saving bank, 7 yr ARM. I sent $10000 as principal this Jan. After 1 month, nothing happened to my monthly payment, I called in and I was told I need to fax something to adjust either monthly payment or the longth of the loan. But I was too lazy, today, after 4 months, I called and they told me that they cannot do anything after 4 month. The principal was reduced to $180000 and the monthly payment and the longth are still the same due to the ARM. Big lesson learned, please don't blame me for my idiotness.

Any suggestions what I can do to solve this problem?

How about this? I send them some money as principal and request reduction of monthly payment. I will have to pay $250 for the change, What is this called? refinancing?

Thanks

I think that's how it works. When you make the xtra payment to the principle, it will reduce ur principle but the monthly payment will be the same.

If u want to have a lower monthly payment, u have to do a new loan or (ask ur lender if they can help u).

voovoov said:

How about this? I send them some money as principal and request reduction of monthly payment. I will have to pay $250 for the change, What is this called? refinancing?

Thanks

It's called recasting and $250 sounds about right or lower than I have seen. It just means they reamortize your mortgage to take into account the lower principle amount. Takes them about 10 seconds to do and they make a few hundred bucks.

voovoov said:Aurianne said:u2head8 is correct. Prepaying principal will reduce the amount you pay in interest over the life of the loan but will not change your scheduled monthly payment amount. Obviously you might reduce the remaining payoff time though if you prepay enough to pay the entire loan off earlier than originally scheduled.

Thanks for the clarification.

If the monthly payment stays the same, does this mean that the amount of interest and principal stay the same or they change accordingly?

Nothing changes.

biglittle said:voovoov said:Aurianne said:u2head8 is correct. Prepaying principal will reduce the amount you pay in interest over the life of the loan but will not change your scheduled monthly payment amount. Obviously you might reduce the remaining payoff time though if you prepay enough to pay the entire loan off earlier than originally scheduled.

Thanks for the clarification.

If the monthly payment stays the same, does this mean that the amount of interest and principal stay the same or they change accordingly?

Nothing changes.

That is not true. If you pay down the principal and maintain the same monthly payment, the amount of principal paid each month increase while the amount of the interest decreases.

It is like jumping ahead on the ammortization schedule by however much the principal is paid down.

why all of the recent threads on how a loan works...should be able to find a nice explanation if google it...

voovoov said: The principal was reduced to $180000 and the monthly payment and the longth are still the same due to the ARM.

I think thats the part everybody seems to have missed. YES the payment will be the same (as stated in above threads). However, the length will not be the same because you are now paying less interest and the same monthly payment (so less interest paid, more principal paid off).

What you're doing is paying your loan off quicker. If you were going to originally pay it off in 15years, and now you're paying less interest, when the principal is paid in say 14years (just a random number), they cant say "well you still owe us a year's worth of payments even though you just paid the loan off".

So my suggestion? Keep the same payment if you can afford it, and on ocassion make larger payments to principal. The loan will be paid earlier either way.

voovoov said:Big lesson learned, please don't blame me for my idiotness
You sign on a loan that you don't understand? No one else to blame but yourself

let's all agree in principle that mortgage principal is spelled with an "a."

sorry to be a douche, but the error happened about 20 times in this thread.

maddybeagle said:why all of the recent threads on how a loan works...should be able to find a nice explanation if google it...

So if theres a loan, then one person is a lender and the other person is the one borrowing it? I still dont understand.