Posted on: 07th Apr, 2008 05:00 pm
I am thinking of refinancing my house and would like to know if the interest is figured as daily simple interest what are the pros and cons.
welcome,
daily simple interest is similar to the simple interest method except that the interest rate is calculated on the actual balance every day. now as you are going for refinance, how long have you taken the mortgage? if you have taken the mortgage within a year then you may not refinance the mortgage now.
let me know if you have any more queries.
daily simple interest is similar to the simple interest method except that the interest rate is calculated on the actual balance every day. now as you are going for refinance, how long have you taken the mortgage? if you have taken the mortgage within a year then you may not refinance the mortgage now.
let me know if you have any more queries.
daily simple interest can be most advantageous to you if you prepay by adding to your regular monthly payment. further, if you make payment prior to the due date each month, you will reduce your interest costs.
by the same token, you need to be careful not to make payment after the due date if you can avoid that. the calculation of simple interest will result in a varying amount of interest/principal breakdown with each payment. the later you pay in each month, the more interest you will be paying.
if you have the facility to make early and partial payments (like splitting up your monthly payment into weekly amounts, for example); this would be a very cost-effective way for you to reduce your interest expense and prepay the entire balance much earlier.
by the same token, you need to be careful not to make payment after the due date if you can avoid that. the calculation of simple interest will result in a varying amount of interest/principal breakdown with each payment. the later you pay in each month, the more interest you will be paying.
if you have the facility to make early and partial payments (like splitting up your monthly payment into weekly amounts, for example); this would be a very cost-effective way for you to reduce your interest expense and prepay the entire balance much earlier.
I stumbled upon this thread because I am 1 year into a 30 fixed mortgage and would like to refinance with a "daily simple interest" loan like the one you talked about. I learned about this type of a loan when I almost got sucked into the Primerica band wagon by some of their sheep.
I find it amusing that you speak highly of the "daily simple interest" loan and that you are a laon officer from Freedom Mortgage. Initially, my loan was given through Freedom Mortgage, it was quickly then bought out by Chase. Why aren't these "daily simple interest" loans offered and pushed, especially during these current stressful economic times?
I would like to think that $1350 out of the $1537 a month for the first 10-12 years would be enough profit for banks. They should be thrilled to help those who actually pay their mortgage monthly and help these people first. Who offers these "daily simple interest" loans currently?
I find it amusing that you speak highly of the "daily simple interest" loan and that you are a laon officer from Freedom Mortgage. Initially, my loan was given through Freedom Mortgage, it was quickly then bought out by Chase. Why aren't these "daily simple interest" loans offered and pushed, especially during these current stressful economic times?
I would like to think that $1350 out of the $1537 a month for the first 10-12 years would be enough profit for banks. They should be thrilled to help those who actually pay their mortgage monthly and help these people first. Who offers these "daily simple interest" loans currently?
my involvement with simple interest stems from a job i had in the mid 90s with a credit union.
what people fail to understand, i am afraid, is that the mortgage market is homogenous. in order for a company/bank/lender/what have you to be involved in the market and to make marketable loans, the systems must be compatible across the board.
if a mortgage lender decided to go ahead and jump on the simple interest bandwagon, i suspect that lender would get awfully lonely awfully quickly.
as for profits, there is little profit for a lender in the interest rate. what is profitable is being able to market the loans, to service the loans; and, of course, fees that are collected in conjunction with the making of the loans.
i tried to be concise here, dino...i hope this answers your questions sufficiently.
what people fail to understand, i am afraid, is that the mortgage market is homogenous. in order for a company/bank/lender/what have you to be involved in the market and to make marketable loans, the systems must be compatible across the board.
if a mortgage lender decided to go ahead and jump on the simple interest bandwagon, i suspect that lender would get awfully lonely awfully quickly.
as for profits, there is little profit for a lender in the interest rate. what is profitable is being able to market the loans, to service the loans; and, of course, fees that are collected in conjunction with the making of the loans.
i tried to be concise here, dino...i hope this answers your questions sufficiently.
my advice---DO NOT OBTAIN A SIMPLE INTEREST LOAN---you will pay more for this type of note. Interest is DAILY...and god forbid you are ever late on a payment.
We made the mistake of obtaining a simple interest loan on our mobile home...this loan is structured more like a personal loan and is not considered a mortgage. We would like to refinance with a different lender as a mortgage, but guess what? No one wants to refi a MH!!
Again, DO NOT OBTAIN A SIMPLE INTEREST LOAN. And----steer clear of dishonest finance companies (Greentree, I am talking about you!!).
We made the mistake of obtaining a simple interest loan on our mobile home...this loan is structured more like a personal loan and is not considered a mortgage. We would like to refinance with a different lender as a mortgage, but guess what? No one wants to refi a MH!!
Again, DO NOT OBTAIN A SIMPLE INTEREST LOAN. And----steer clear of dishonest finance companies (Greentree, I am talking about you!!).