Sometimes borrowers may have problems even after they made up closing costs on time. This rarely happens with those who took out a loan online since all information on such a loan is contained in the user’s personal account on the site. That is, you will notice any unpaid amounts. But if the loan was issued at the bank, and there is no way to see the balance of the debt or the amount of the next payment on your own, some problems may arise.
What can happen?
Due to carelessness, the borrower may not pay a certain amount or make a mistake when will be calculating the amount of the next payment. As a result, you will be convinced that the debt is closed, but in reality, a small amount remains, which will gradually grow, and your credit history will deteriorate. This can and will affect your ability to deal with your mortgage payments if you are not careful.
How to make up a closing cost correctly:
– Make sure that you have no debt. You might have miscalculated the amount, or you might have missed some commission. To do this, ask the bank or financial institution for a receipt, which will indicate that there is no debt.
– Close your credit account or card – there may be a charge for servicing them and will lead to an increase in debt.
– In the financial institution, also find out if other accounts have been opened in your name – deposit, credit, or a card for crediting interest. If there are such accounts, they should also be closed.
– It is better to make payments not on the last day, but earlier. Sometimes it can take more than one day for funds to be credited, and if you pay by the deadline, there will be a delay.
– If you decide to repay the loan ahead of schedule, inform the cashier about this when transferring through the bank. Otherwise, part of the money will go towards debt as a monthly payment, and the remainder will remain until the next payment. As a result, interest will not be accrued on the balance of the debt, which you will not know about, since you are sure that you have paid the loan ahead of schedule.
The main thing that needs to be done in order to avoid problems and difficulties in the future is to ask the financial organization for a certificate on the reset of the account and the closure of the loan. You need to keep this document for at least three years in order to be able to provide it to creditors in case of any questions. Keep receipts for all payments.
Such situations rarely occur. Usually, closing a loan goes without problems if the amount was calculated correctly. Using online loans, you save yourself from bureaucracy – all data on the balance of debt and payments made will be saved in your personal account. Both the borrower and the lending institution will be able to view them at any time.
Written by Bader Albader, market researcher.