Comments on: Real Estate Glossary: P http://montrealrealestateblog.com/real-estate-glossary-p/ A daily dose of the local market. Thu, 28 Aug 2008 09:44:56 +0000 http://wordpress.org/?v=2.6 By: Danuta Levitzki Worozanska http://montrealrealestateblog.com/real-estate-glossary-p/#comment-589 Danuta Levitzki Worozanska Wed, 28 May 2008 01:03:59 +0000 http://montrealrealestateblog.com/?p=12#comment-589 Statement: Mortgage prepayments decrease the total amount of interest paid over the life of the mortgage. Explanation: Mortgage Pre-payments are additional/extra amount of money a borrower can pay on top of the regular monthly payments. This additional/extra amount of money applies directly to the principal of the mortgage loan. Therefore, the outstanding balance of the mortgage decreases faster. In other words, the less money is owed to the bank the less interest is being paid to the bank. Statement: Penalties may or may not apply. Explanation: There is an open mortgage loan and closed mortgage loan. The open mortgage has no pre-payment limits and can be completely paid off anytime without penalties. The closed mortgage has limits depending on the contract a borrower signs with a financial institution. Make sure you ask your mortgage specialist about the limits of the pre-payment options before singing the mortgage contract. Statement: Mortgage prepayments decrease the total amount of interest paid over the life of the mortgage.

Explanation: Mortgage Pre-payments are additional/extra amount of money a borrower can pay on top of the regular monthly payments. This additional/extra amount of money applies directly to the principal of the mortgage loan. Therefore, the outstanding balance of the mortgage decreases faster. In other words, the less money is owed to the bank the less interest is being paid to the bank.

Statement: Penalties may or may not apply.

Explanation: There is an open mortgage loan and closed mortgage loan. The open mortgage has no pre-payment limits and can be completely paid off anytime without penalties. The closed mortgage has limits depending on the contract a borrower signs with a financial institution. Make sure you ask your mortgage specialist about the limits of the pre-payment options before singing the mortgage contract.

]]> By: Mia http://montrealrealestateblog.com/real-estate-glossary-p/#comment-570 Mia Fri, 23 May 2008 23:21:08 +0000 http://montrealrealestateblog.com/?p=12#comment-570 I am having dome trouble understanding prepayment penalties. I read an <a href="//www.mortgagecreditproblems.com/blog/?p=5”" rel="nofollow">article on prepayment penalties</a> that was pretty helpful, but I dont understand the statement that you made above: "Mortgage prepayments decrease the total amount of interest paid over the life of the mortgage. Penalties may or may not apply." Can you explain please I am having dome trouble understanding prepayment penalties. I read an article on prepayment penalties that was pretty helpful, but I dont understand the statement that you made above:

“Mortgage prepayments decrease the total amount of interest paid over the life of the mortgage. Penalties may or may not apply.”

Can you explain please

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