My mom is on disability low income and is close to paying off the 1st lean on her condo 2-3 years, do you think the company that currently holds a 2nd lien on her home may offer her a smaller payoff if we agree pay it off for her?

My mom filed for bankruptcy about 4 years ago and is on disability. Disability is her only source of income. She should be paying off the 1st lien on her condo within the next 2-3 years. Her home is worth about the same amount she purchased it for 13 years ago. She currently has a 43,000 equity on her home which we would like to help her pay off. Do you think the equity company may be willing to work out a smaller payoff/deal with us if we offer them a payoff?

Asked on May 24, 2016 under Real Estate Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

It's worth trying, but lenders don't really want you to pay off their loans early: when you do, they lose out on the interest they'd otherwise have been paid. Therefore, while you have the right to pay it early, there is not advantage to the lender if you do so, and so no reason to expect that they will agree to accept a lower payment in order to get it sooner.


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