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2

Builders can't force you to use a specific preferred lender. This is due to the "required use" clause in the 2008 updates to RESPA. However, they can include terms in their contract that effectively steer you towards preferred lender(s). For instance, it's somewhat common for a builder to require you to at least be prequalified by their preferred lender. ...


2

It's been a bit since I've researched this. My understanding is that they can legally require you to be qualified by their approved lender(s), but that they cannot legally require you to use their lenders. dwizum noted a good point about the timing and lender change provisions in your contract; the timing of your change could be problematic based on your ...


4

I think in most situations, the seller of the home will be unconcerned about the source of the money and how much is a loan, as the money will pass through a bank anyway. You are incorrect in this assumption. The quality of the buyer is very important to the seller. You, as a 50% down buyer, look far more attractive as a buyer that is putting 10% or less ...


-1

You are not comparing apples to apples. You are correct. The APR for year 1 might be 4.84 if you pay it off in one year. But you are comparing it to a 20 year loan. Therefore you have to average that out; 4.84 the first year and 0 the remaining 19 in order to have a meaningful comparison. = .24% APR on 20 year "loan"


1

If the terms of the mortgage were that you didn't have to make any payments for the duration of the loan, except for a balloon payment of the interest plus principle ($165,000 + $116,617.93 = $281,717.93) after 20 years, then taking ($281,717.93/$165,000)^(1/20) to calculate the effective interest rate would be a valid calculation. But you don't get to put ...


47

Your first sentence is written in a way that highlights a common misconception about how term loans work: Most mortgages use an amortization schedule that have you pay more interest than principal at the beginning Note the banks are not doing anything mischievous or playing with numbers in such a way to cause you to pay more interest up front than you ...


65

I see your confusion: You're looking at the interest as if it applied to the whole loan balance. That's not what actually happens--the interest rate remains the same but as you pay down the loan the amount that you are paying interest on drops. That's what that chart really is showing--as the amount owed drops the interest drops and the amount that goes ...


17

It is not so much that you are miscalculating, but that what you are calculating is not meaningful in the context you're trying to use it ("the annual rate of the loan"). You are essentially trying to compare apples with oranges. You have taken the total interest paid (over one or 20 years), expressed this as a fraction of the original loan amount, and then ...


5

As long as there is no prepayment penalty, and there are no tricks like counting the effect on the rate due to “points” being charged, the rate is the rate. 4.5% is the same through the day you pay it off, no matter the time. I don’t know how you are getting the other numbers. Each month, the interest is calculated by multiplying the remaining balance by ...


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