The Washington times., 1924-11-22
AMOR TIzATION
PLAN HIGHLY
ENDORSED
Savings Bank President Says
Method Is Like Attacking
Army in Detail.

In many cases 1t will not be
possible for the buyer to, borrow
aH the money he requires on a
FIRST mortgage, and he may have
70 borrow additional funds on Il
second mortgage or note. The
holder OF the second mortgage
takes more risk, consequently rates
OF interest on second mortgages
usually ruin higher.
Bonuses or commissions Of as
much as 10 per cent are some.
times required for placing sec.
ond mortgage. The character of
the home seeker is often deciding
ractur in his ability To- obtain q
second mortgage on reasonable
Loan BY Contractor.
The contractor who builds
house may take such a mortgage
himself and expect to sell It at a
quarter or fifth less than its face
alue. This fact should be borne in
mind. and he should charge less
or the house IL the buyer can pay
ash.
Second mortgages are sometimes
Jbtainable from companies which
make a speciality of such business,
from employers, and from individ.
lale who have money to lend.
/ The lender, Il interruptions, NAV
encourage the purchase Of an ex.
penstve piece of property when he
g confident the buyer cannot meet
the payments 50 that he can fore
/ close the mortgage and buy back
the property himself at q forced
sale, when prices may be low. This
is an additional reason for deal
ing with a savings bank, which
viii always advise against a pur-
chase beyond ones means.
Reducing the Mortgage.
No matter how little or how
much one has to borrow, 1t IL
good policy to pay off part Of the
loan at regular intervals. The proc
ess Of paying off the principal
a little at a time Is called amorti-
2ation.
Thus, on a loan of $1,000 at
8 per cent interest, payments Of
$40 month, or 1920 year, will
take care of the interest on. the
loan and cancel the principal in
less than twelve years, leaving
the home free of debt.
Ia
ings bank, who has also been presi-
dent Of the savings bank section
Of the American Bankers Associa.
ton, states:
Paying off a loan in INSTALL
nnents is like attacking an army
in detail. The borrower, instead
Of having one large payment TO
look forward to, has a succession
of moderate payments, which
can be easily met"
The payments agreed on for
amortization are usually met regti.
larly, 50 that the loans are paid off
steadily out of savings. This re.
cuces the interest charges and leaves
the family much better off finaIl-
Cially in case of death or misfortune.
Where no amortization is agreed
, to, on the other hand, many loans
are not reduced before they fall due,
and savings have not been built up
to pay them off. Such loans some-
times drag along for q lifetime, and
may be foreclosed when they cause
great distress.
Prudent Course.
The prudent course IL to start pay.
ing off the loan as soon as the pur
chase 10 made. Savings banks pro-
vide that the loan may be paid off
sooner than it's maturity, If the Dor.
rover so desires, and without dis.
advantage.
No mortgage on a home should
be regarded as permanent, for If
there is a shortage Of mortgage
money when it falls due there may
be difficulty about renewing it. In
the case of second mortgages, espe,
cially. this is important, and they
should be amortized as quickly as
possible.