The herald., 1897-10-14
Building and Loan Notes

If building association loans were made
without any premiums or puzzling plans
so that borrowers could understand the
exact nature of the transactions, remov-
ing the complications and all uncertainty
there would be a much larger number of
persons borrowing through the medium of
building societies.
When borrowing money on real estate
number of things must be taken into
consideration-the time for which the loan
is made the rate of interest, and the re-
quirements as to the payment of interest
and principal.
While 1t would be best for some people
to borrow on a straight loan, paying the
interest semi-annually, and the entire prin-
cipal at the expiration of three or five
years, it would be better for nine-tenths Of
them to have a loan where the interest and
part of the principal is paid each month,
and an opportunity to pay as much addi-
tional on the principal as they may desire,
at any time.
When person has a straight loan he
naturally puts off saving small amounts
to meet it until the expiration of the time
when he finds that he is just where he
started-with the entire principal still due
having only paid the interest, making it
necessary to renew the loan and pay an
extra commission to the agent The same
experience is often repeated until the prop
erty is sold or the mortgage foreclosed.
If the loan had been one on which
small amounts were regularly paid on the
principal, it would have been paid off and
the property saved, as many additional
amounts would have been applied on the
principal, which were used for other pur-
poses, expecting to make it up before
needed. for, unfortunately, few people
make up what they once spend.
A person can better afford to pay or
even 10 per cent for loan that can be paid
in "dribs' than 6 per cent for a straight
loan to be paid in lump. The good reso-
lutions made when the loan is new, to
make every effort to pay it off as soon as
possible, and the opportunity to apply
small amounts, form a habit which eventu-
ally wipes out the debt, while a straight
loan becomes fixture, and the longer it
runs without being diminished the less in
clination to pay it, and with the impair
ments of age, both as to the property and
the individual, the heavier becomes the
burden until the final sale or foreclosure.
+ +
An Illinois building and loan inspector
said "If more people understood the ad-
vantages to be derived from borrowing
upon mortgage from building associations
there would be ten borrowers where there
Is one now. If people generally, who are
anxious for a safe and profitable place of
deposit or inves stment, understood building
associations, there would be twice as many
societies and ten times as many
members as there are now. The tendency
to speculate keeps thousands out of these
associations. and it is safe to say that
when the profit and loss account for the
year is made up, 50 per cent of the whole
number-if they admit the truth-will find
that the only thing they have accomplished
is worry. disappointment and loss. They
will lose 800 in speculation and will not say
word about it. but if they should drop
it in the street there would not be men,
ber of the family or near friend but what
would hear of it. Building associations can
fail; they do sometimes; rarely, however.
Speculations, on the contrary, fail Of good
results almost always. If building socie-
ties advertised like other financial institu-
tions their good work would be universally
known"