Paying off a personal loan right after origination

With extra money in the bank, the homeowner would be able to cover his or her mortgage payments for a few months. So its basically a foreclosure-avoidance strategy. But theres a major flaw with the concept of cash reserves. In theory, the borrower could spend that extra money two days after closing. It wouldnt be the smartest move, but theres really nothing to prevent it from happening. The money does not sit in an escrow account managed by a third party.

It sits in the borrowers bank account, where its totally accessible. So the lender has no assurance the borrower will keep the money to serve as a safety net (which is the intended purposes of cash reserves). More Prevalent in Wake of Housing Crash.

Paying off a personal loan right after origination

You are urged to read and understand the terms of any loan offered by any lender, whether tribal or state-licensed, and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you. The purpose of shorter duration loans is to provide the borrower temporary financial relief.

Such loans are not a long-term financial solution. Persons facing serious financial difficulties should consider other alternatives or should seek out professional financial advice. This website is not an offer to lend. WhiteRockLoans. com is not a lender and does not make loan or credit decisions.

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Paying off a personal loan right after origination

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Paying off a personal loan right after origination