Anyone Know How To Do Mortgages?
You have decided to buy a new home and the bank offers you a 30 year fixed loan at 5.5% on a balance of $150,000. Use the table provided to determine the monthly payments. The table says that a 30 year fixed loan at 5.5% is 5.68 a. $416.67 c. $852.00 b. $439.00 d. $874.32 In order to purchase a home, a family borrows $159,000 at 6.5% for 30 years. Use the table to find their monthly payment. Round the answer to the nearest cent. The table says that 6.5% for 30 years is 6.33 a. $954.00 c. $1,186.14 b. $1,006.47 d. $1,276.36 The home that you want to purchase requires that you pay 3 points towards a $225,600 loan. Determine the cost of the home after the 3 points have been applied. a. $225,600 c. $230,112 b. $227,856 d. $232,368 A couple gets financing for 80% of the $150,000 purchase price of a house at the rate of 6% on the monthly unpaid balance. Use the table provided to find the total amount paid to the finance company if the loan is repaid in 40 years. 6% of 40 years is 5.51 a. $231,948.00 c. $317,376.00 b. $289,005.00 d. $141,509.00 You have just been approved for a 30 year 5.5% fixed home mortgage. The monthly payment that you qualify for is $532.10. Use the table provided to determine the price of a home that can be purchased. Round your answer to the nearest cent. 30 years at 5.5% is 5.68 a. $98,258.68 c. $104,120.32 b. $103,879.65 d. $93,679.60 You have just applied, and have been approved for a $175,000 mortgage. The rate quoted to you by the lender is 5.5% for a 30 year fixed mortgage. Use the provided table to determine how much of your first month’s payment goes towards the principal. 5.5% for 30 years is 5.68 a. $191.92 c. $187.32 b. $190.23 d. $184.88
What is a "Second Mortgage" mean?
Suppose you have a house worth $200,000 with a $60,000 mortgage. THere is a huge $140,000 equity in the place. The owners can get a new mortgage for say $160,000, paying off the old mortgage (60,000) and pocketing the extra 100,000 minus expenses. However another way to do this is to get a 2nd mortgage for the $100,000. The first mortgage (60,000) stays around but a second mortgage is put onto the property for the $100,000 and so th total mortgage is still $160,000.
Why do people get second mortgages?
Before the "Credit Crunch" 2nd mortgages were a common way of avoiding mortgage insurance when you didn't have 20% to put down on the purchase of a home. Those were the first casualties. Today Home Equity Lines of Creidt (HELOC's) do exist for preferred borrowers with equity in their homes. They work similarly to credit cards, in that you have a credit line, which you can use for anything you want. Often the first 10 years you pay interest only and then the last 20 years, you can't charge on them and have to start paying back the principal plus interest. I think every homeowner with equity should have one established. If you don't draw on it it costs you nothing, except perhaps a small maintenance fee. It's like having free insurance in case you run into a financial problem, like a job loss or illness. As I tell my clients, when you NEED it you might not qualify for it. Because home values have been declining, many HELOC's have been frozen or credit lines reduced and many lenders have stopped offering them.
Can I buy a new house by mortgaging my old house in a mortgage loan?
Let’s say you own a house with no loan on it. (We call this “free and clear”). You can borrow using the equity of that home as collateral and then take the “cash out” proceeds of that loan and buy another home with it. Yes. You can do that.There are some cases where that might be less expensive than getting a regular loan on the second property. Especially if the second property is close to the first house, a cash out refi might be a lot less expensive than an investment property loan. You’ll want to talk to your mortgage officer about that.If the first property is much more valuable than the second, and you have a lot of equity in it, you might even be able to get a second mortgage on the first property. That’s probably not going to be as good a deal as getting a loan on the property you’re buying, but again talk to your loan officer and see where pricing and options shake out.You could get loans on other types of collateral. Different types of collateral will have different rules and rates. Generally investments are not as good collateral as homes—especially your primary residence, so the rates might be higher (they’ll probably be a lot higher).
Anyone know benefits or drawbacks of PMI (Principal Mortgage Insurance)?
I usually recommend the the 2 loan option for tax purposes. You cannot deduct MI premiums off your tax return. but you can deduct the interest you pay on your second mortgage. This happens in most cases, but check with your tax advisor to confirm. Also, in most cases you may be able to refinance the second mortgage with out any pre-payment penalties. However, there are new programs out there that simply roll the upfront MI premium into your loan amount so that you can get the best of both worlds. Ask your brokers if they have that option available. The PMI does usually get you a lower rate and once your loan-to-value reaches 79% it is automatically dropped. However, as you noted: the monthly payments are very close for either option. In a nutshell: If you plan on staying in this loan forever, then it makes sense to pay PMI. At some point the PMI will drop and you will have a fixed payment, assuming this is a fixed rate mortgage. If you plan on refinancing in the future or selling your home, then you may want to try the 2 loan option. Not very many people stay in their loans for 30 years any more... Best of Luck!