Need fast Mortgage answers! THANKS! EDIT**

We are about to mail over our last paperwork for the Mortgage and my fiance realized the following: (we are doing the 30 years fixed rate) if we win the lottery in 2 years and decided to pay off the house in full, we would have to pay off the principal and Interest for the 30 years that we are planning on paying off the house. For example, if we are paying $2000 a month (just for arguments sake and this includes principal and interest). If we decide to pay off the house in 2 years, would we have to pay back the bank the 30years worth of interest and principal or just the principal that is left - which 28 years worth?
I'm so confused! The Loan Officer is telling my fiance that if we were to pay off in the next 2 years (not that we will), we will have to the the principal and interest based on the 30 years...is that true?


EDIT***

The 2 years that I threw in there is just a number. It could be any numbers of years before the actual 30 years that we plan on paying off the house. This house is also in NJ so I'm not sure if there's a difference from NY. I asked my Fiance and he said that there's no pre-payment penalty for us...
Thanks!!!!

EDIT X 2****
Phew...We have everything settled. So apparently, the guy who my Fiance was talking to was someone that worked FOR our Loan Officer. FH spoke to the actual Loan Officer and we got everything cleared. We wouldn't get reimbursed for the interest that we paid up to the point that we want to pay the rest of the mortgage in full...which make sense!!
THanks Ladies!! I know I could always count you all!!!!

THANKS!!!!!

Message edited 3/19/2007 4:02:31 PM.

Re: Need fast Mortgage answers! THANKS!

I'm sure someone will explain better.

But it sounds like your mortgage, as written, has a pre-payment penalty.

Re: Need fast Mortgage answers! THANKS!

sounds like a prepayment penalty to me.

if its only two years, i wouldnt worry about it - even if you DID win the lottery you could just wait the two years then pay off the mortgage.

but definitely find out how long the prepayment clause is for.

Re: Need fast Mortgage answers! THANKS!

The above poster is correct. If there is a pre-payment penalty written into your mortgage, you would have to pay back the balance on principal PLUS the balance on interest. We do not have this in either of our mortgages- no pre-payment penalties. Honestly, I would never take a loan of any sort that had a pre-payment penalty. I'd think that over long and hard before you send back those papers...

Re: Need fast Mortgage answers! THANKS!

yep- sounds like a prepayment penatly

is this house in NY? b/c in some states they are normal-

most mortgage bankers or brokers wouldn't want you to have one- then you can't re-fi

but if it's only 2 years- I wouldn't be too concerned- if there is no other way to get the loan done- I would be ok with it- underwriters at banks are being watched like hawks now

Re: Need fast Mortgage answers! THANKS! EDIT**

If there's no prepayment penalty, then no, if you were to pay off your house in the next few years, you would not owe interest on it for the remaining years. It works just like a car loan.

Re: Need fast Mortgage answers! THANKS! EDIT**

The two years was just a made up number for your example.

I'd think twice and get a RE lawyer to look at that mortgage before signing it.

Re: Need fast Mortgage answers! THANKS! EDIT**

Never talk to anyone other the loan officer- a loan processor at my husbands old office once told his friend the WRONG info about the loan my DH was doing for him- and it turned into a huge mess

I would only speak to the LO or the LO boss-

Re: Need fast Mortgage answers! THANKS! EDIT**

Re: Need fast Mortgage answers! THANKS! EDIT**

Loan processors are NOT suppose to talk to customers for that reason

they have limited knowledge of the loan- they only see their part

sorry you had the scare- I'm glad it worked out!

I would say something to the LO- make sure he/she knows the processor told you guys the wrong info-

Re: Need fast Mortgage answers! THANKS! EDIT**

We live in NJ, and plan on paying off the Mortgage in less than 10 years (we're half way there). There is no pre-payment penalty in NJ.