Dear John: Now’s a good time to modify your mortgage
Dear John: A number of years ago you wrote a series of articles describing how people who currently had mortgages and wanted to put down an additional sum of money to pay down the principal should approach their banks.
I remember that you said if they followed your advice, and it worked, they should send you a pizza (which, in fact, I did — hope you enjoyed it).
There was a name for this type of transaction that I can’t remember and was hoping you might.
I am asking this because my son is in this exact same situation. He came into some money and wants to pay down the principal.
I would like him to be able to go into the bank and ask for this type of arrangement using the correct name. M.M.
Dear M.M.: Boy, do I remember that pizza! Sausage and mushrooms, I believe.
If I recall correctly, back in 2003 some banks — including Chase and Wells Fargo — started voluntarily (but quietly) reaching out to customers asking if they wanted to refinance their mortgages. Interest rates were dropping, and banks obviously didn’t want to lose those mortgages to competitors offering a better deal.
When I heard this news through the grapevine, I told readers that those with mortgages several percentage points above the going rate should call their banks and ask to refinance because they were thinking of taking their business elsewhere. I think the word you are looking for is a rate “modification.”
In addition to that, you must have reduced your payments further by paying down some of the loan with your newfound wealth.
I’m glad you are bringing this up now, since mortgage rates are so low at the moment — because of the weak economy — that anyone with a mortgage should look to see if they can do better.
It can’t hurt to ask your bank to modify your existing loan. You will, of course, need to threaten to search out a better deal somewhere else.
If that doesn’t work, you should look at other mortgage options, realizing that getting a new loan elsewhere could involve thousands in upfront costs.
But it’s easy to figure out how long it will be before you recover those costs from the lower loan rate.
As for putting down extra money during the refinance, be careful.
On one hand, cash is earning next to nothing right now. So putting the money toward your mortgage essentially earns you whatever your loan rate is — minus the tax benefits.
On the other hand, mortgage rates are so low now that you might want to borrow the largest amount possible. When money is cheap like it is today, some people would argue that you should borrow as much as you can afford.
Your son should really sit down with a financial planner or his bookie to decide what to do.
Now back to the most important issue — pizzas. No thanks, this time. I’m trying to cut back.
Dear John: I saw your piece in The Post the other day about fuel surcharges.
I called Waste Management in New York regarding this issue, and it said its charge is based on the price of diesel and is applied when the fuel goes above 95 cents a gallon.
Obviously, Waste Management’s fuel surcharge is never going away. W.R.
Dear W.R.: Yep, obviously none of these fuel surcharges will go away.
And why would corporate executives cut people a break? Airlines such as American are making lots of dough with fuel at these prices. And until people say, “I’m not buying your product or flying in your plane until you lower your price,” nothing is going to happen.
Besides Waste Management, you should ask other companies the price at which their fuel surcharges were first instituted. It seems fair that these extra charges should disappear once fuel goes below whatever price that was.
Dear Readers,
Your letters to John Crudele are streaming in fast and furiously, asking Dear John to right the wrongs you’re facing. Because of this influx, The Post Business section will feature more of your inquiries in the hope of helping you with your troubles.
Send your questions to Dear John, The New York Post, 1211 Ave. of the Americas, NY, NY 10036, or john.crudele@nypost.com