Unchained Preppers
General Category => General Discussion => Topic started by: JoJo on May 17, 2016, 11:25:45 AM
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A question or two for those who know more than I which is probably everyone on this board.
There's a financial collapse and you still have a mortgage but you have enough money in the bank to pay it off. In the collapse the value of the dollar goes down do,you still owe the exact number of dollars to the bank or do they adjust for the loss of the dollars value?
If the number of dollars for your mortgage stay the same wouldn't it be best to remove your cash from the bank and pay the mortgage monthly? I know most will say to pay off the mortgage now before the collapse but if your on SSI the checks will stop coming in.
I believe if there is a collapse you will still be able to buy gas and food but at a much higher price that means you will need more cash.
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Great question JoJo. I do not know but Welli might. I suspect that the monthly payment will not change. With that reason, the loaning institution usually have in the contract that they can ask for their money back with 30,60, days notice.
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I forgot about the call in notice. Thanks for reminding me. I was hoping to take the nervousness (wrong word but I don't know how to spell the right word) out of it.
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Very seldom do banks use the "call in notice" or "acceleration" but if the SHTF I would assume they would do this across the country unless Congress stopped them. It would be bad for millions of folks wondering the streets with no roof over their heads.
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None of the notes or Deeds of Trust or such I ever drafted (more than a few-- lawyering) had any type of acceleration clause without significant cause. Inflation was not a cause.
That cause generally was missing a payment or more and one waiver did not prevent them doing it later. I would pull the $$$ out of the bank and make monthly payments. They cannot (IMHO) call in the loan just because of inflation and such.
And if it got bad enough to do anything like that, your little mortgage would be low on the list of a bank's life saving possibilities. Be more afraid of it just closing and you not being able to access any money.
Nemo
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How much discount do you get if you pay it upfront?
If you get no discount, get that money you would use to pay the debt and invest it.
I dunno what kind of collapse you're thinking about but usually in economic crisis you start having a lot of inflation and probably your mortage isn't adjusted by it so you'll end up benefiting from it as your debt would be comparatively smaller each day.
Never think about collapses when dealing with money, no one can predict collapses and people waiting for them lose a lot of money by being overly cautious waiting for shit that never happens.
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Thanks guys you eased my mind. I know what I have to do now.
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Unless you have an ARM (adjustable rate mortgage) or some other rare, weird product, your note from the lender will specify exactly the monthly payment and when it's due, when it's going to mature, etc and those terms can't change. Even ARMs have specific terms about when your rate and payment can change and how much, including a cap. MOST (not all, as there are some special cases, but most) mortgages do not have pre-payment penalties, so you can pay it off early. Just like pre-payment penalties, most loans do not have demand features (where the bank can call in the loan), either, and if your loan does have one for some weird reason your note would spell it out.
Pull out your note and reread it. (If you need help translating the mortgagese let me know.) It will give you the specifics of what you agreed to when you signed your name on the line (and this is why you should never sign something you haven't read and/or don't fully understand).
Here's where I depart from what I *know* and move to opinion. If it were me and hyper inflation set in I would pay off my mortgage as quickly as possible. The money will become more and more worthless, so having it sit around cheapens the value where owning your home free and clear gives you a more secure base and all you'll have to worry about is taxes and insurance.
The one upside to keeping the money and continuing to make payments is it keeps your "nest egg" intact longer in case things get better sooner and it's not like your payments are going to be changing, so it could be smarter to do that. It really depends on your risk tolerance, your specific situation, etc.
(BTW, I am not a lawyer, accountant, licensed loan officer, etc. I do have over a decade's experience in the mortgage industry including closing, underwriting, processing, compliance, and sales, but I am not offering legal advice here. Don't sue me, bro. :) )
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Thanks to all! :cheers: