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102 votes

Does a company have to have your login information to verify your identity?

No. Anyone who asks for your username and password is very likely a scammer. Access to id.me is especially valuable as it would allow the scammer to essentially steal your whole online identity. Make ...
littleadv's user avatar
  • 177k
42 votes
Accepted

Which mortgage should I pay off first? Same interest rate and mortgage length

You haven't accounted for what happens when the small loan is completely paid off. Seven years into the aggressive payoff schedule you need to shift all original principal and interest payment and the ...
mhoran_psprep's user avatar
14 votes
Accepted

How to compare loan interest rate to savings account interest rate?

The question boils down to the taxes. If your loan is tax deductible (e.g.: mortgage loan or investment interest, and you're itemizing the deductions), then the tax benefit reduces the loan cost. Your ...
littleadv's user avatar
  • 177k
14 votes

Are banks willing to lend money to one-man APP startups?

Two options: Personal loan. In this case the bank doesn't care what you're using the money for. You just ask for money and promise to repay and do with the money whatever you want. Usually these ...
littleadv's user avatar
  • 177k
13 votes

How can a senior finance building a home with no current credit score but good equity in current home?

Talk to a local bank or credit union about getting a Home Equity Line of Credit (HELOC). With a paid-off home it should be no trouble to get a loan even with an unusual credit history. The loan will ...
D Stanley's user avatar
  • 137k
12 votes
Accepted

To what extent do restrictions on loans apply?

Banks are aware of this fungibility and will take any loan into consideration when determining eligibility and risk. Taking out a loan for any reason during the process will likely be a red flag ...
D Stanley's user avatar
  • 137k
11 votes

Which mortgage should I pay off first? Same interest rate and mortgage length

However, I just started thinking, and because of the nature of amortized loans, I'm obviously paying quite a lot of interest in the beginning.... This is a common point of confusion, the portion of ...
Hart CO's user avatar
  • 70.5k
11 votes

Are there any amortized home mortgage loans where the monthly payments are distributed equally between interest and principal?

Such a product does not exist. And it would be pretty unlikely that you'd be able to get such a thing past a regulator and ensure that you as a lender actually make money. Let's work through the ...
Justin Cave's user avatar
  • 27.3k
8 votes

How exactly does a biweekly payment schedule on your mortgage reduce the amount of overall interest paid over the life of the loan?

It depends on how the loan is set up and the lender's policy towards early payments. If the loan is set up with a monthly payment then the payment amount can be computed based on that formula where n=...
D Stanley's user avatar
  • 137k
7 votes

If loans are sold at discount to other lenders, why isn't the same offer given to the debtor for payoff?

Why wouldn’t the payoff amount of the loan be discounted similar to a bond with lower yield than current market rates. You're confusing the yields to investors with debt obligations. When a bond is ...
littleadv's user avatar
  • 177k
5 votes

How to compare loan interest rate to savings account interest rate?

Loan interest is front-loaded. Savings interest is compounded. Use an amortization calculator/table and a savings calculator to visualize the interest and decide which one makes more sense. Loan - ...
MonkeyZeus's user avatar
  • 8,473
5 votes

How to compare loan interest rate to savings account interest rate?

Should I put excess income towards the loan or savings? Depending on tax rates, and if are going to deduct the interest , you can calculate which is better mathematically. But what is the savings for?...
mhoran_psprep's user avatar
5 votes

Why aren’t amortized loans outlawed and replaced with a more equitable model to the borrower?

If you restrict how much profit the bank can make from lending, you'll get less lending. And that will prevent a lot of people from getting loans at all. If we're talking about a $500k loan, that's ...
Justin Cave's user avatar
  • 27.3k
5 votes
Accepted

If loans are sold at discount to other lenders, why isn't the same offer given to the debtor for payoff?

Theoretically, this could certainly work. Practically, however, it doesn't. The bank that originated your loan almost certainly packaged your loan with hundreds of other loans and sold it to an ...
Justin Cave's user avatar
  • 27.3k
5 votes

How exactly does a biweekly payment schedule on your mortgage reduce the amount of overall interest paid over the life of the loan?

Payment = [P*(r / n)(1 + r / n)^nt] / [(1 + r / n)^n*t - 1] where n = 12, P is the loan, and r is the interest rate. If the periodic rate is given as r / n with n = 12 months, this implies that the ...
Chris Degnen's user avatar
  • 9,877
5 votes

Is it a good idea to take a loan just to build borrowing history? (United States)

I find it difficult to believe that you were flat denied a loan just because of one missed payment and a 700 credit score. It's also possible that either you wanted to borrow more than your income ...
D Stanley's user avatar
  • 137k
4 votes
Accepted

How to calculate monthly payment of a loan

The difference is how you interpret "8% compounded annually" In reality, loan rates are quoted as "annual", meaning the actual monthly interest rate is n/12 (r/n in your formula). ...
D Stanley's user avatar
  • 137k
4 votes
Accepted

How much does having an installment loan in your credit history matter vs simply having a good credit score?

There's no way to answer this since different lenders have different underwriting policies. For what it's worth, I haven't seen a mortgage where the requirements were that the credit history had to ...
littleadv's user avatar
  • 177k
4 votes

Do lenders consider stocks and bonuses as part of your income?

My experience it that if you can show it to be consistently part of your income, then yes. Some banks have special deals for employees of some larger companies where they wave the tenure requirement. ...
littleadv's user avatar
  • 177k
4 votes
Accepted

How to calculate the very last payment when repaying a debt?

We can use the formula for the FV for the months where we pay the full amount, then calculate the interest on that to calculate the last payment. In excel, that would be = FV( rate, floor(nper, 1), ...
Guillaume F.'s user avatar
3 votes

How exactly does a biweekly payment schedule on your mortgage reduce the amount of overall interest paid over the life of the loan?

A mortgage is normally calculated based on monthly payments, that is, 12 payments a year. If you get biweekly payments, that is 26 payments a year. Usually each payment is half the monthly payment. So ...
Jay's user avatar
  • 22.8k
3 votes

IRA withdraw penalties vs interest rates today

Biggest concern: There isn't just the penalty. You're also giving up tax-advantaged growth of that money in the IRA, which depending on your age may be a large additional cost. Some retirement plans ...
keshlam's user avatar
  • 48.2k
3 votes

Why aren’t amortized loans outlawed and replaced with a more equitable model to the borrower?

Amortizing loans match how banks receive money and how they pay it out. When you have a savings account with the bank, it earns a certain interest rate monthly, say 0.5% monthly for a 6% annual rate. ...
D Stanley's user avatar
  • 137k
3 votes
Accepted

Confusion with payment calculation for fixed payments on fixed interest loan

It's simply how interest rates are quoted - they're quoted as an annualized rate but they are applied monthly, hence the X/12%. It does not mean that you accrue exactly X% over the year if you do not ...
D Stanley's user avatar
  • 137k
3 votes

How can a senior finance building a home with no current credit score but good equity in current home?

haven't needed to borrow money in years, hence have no current credit score. ... ...He has never had a credit card. The time since having a mortgage or a vehicle loan isn't what lead to a zero score, ...
mhoran_psprep's user avatar
2 votes

Does a 401(k) loan count as debt when calculating Debt-to-Income Ratio?

If a lender is going by conventional loan guidelines (i.e. Fannie Mae or Freddie Mac), they do not need to include a 401(k) loan as part of the DTI. Here's the link directly to Fannie Mae's guide.
eire416's user avatar
  • 21
2 votes

Could Paying Off Car Loans Early be Bad For Credit?

I paid off my car loan 6 months early. My credit rating dropped 50 points (from 799 to 749). The stated reason was because they couldn't find any installment loans on my credit record. Which is true, ...
Walter's user avatar
  • 221
2 votes

Why aren’t amortized loans outlawed and replaced with a more equitable model to the borrower?

I think you have amortising and compounding confused. Amortisation means that the total amount still owing falls with each payment - you could have an amortising loan with 0% interest. Taking your ...
MD-Tech's user avatar
  • 9,025
2 votes
Accepted

Loan: calculate number of monthly payments with fixed annual interest, fixed montly payment, and 1 additional payment per year

There may not be a closed-form formula to determine the length due to the extra periodic payment, but the algorithm can be done fairly easily in a spreadsheet: You need 5 columns: Month, Payment, ...
D Stanley's user avatar
  • 137k
2 votes

If loans are sold at discount to other lenders, why isn't the same offer given to the debtor for payoff?

I think there are two main reasons this doesn't happen. Firstly, it'd be a lot of admin hassle for them to offer a buyout to individual borrowers. They'd have to deal with any relevant consumer ...
GS - Apologise to Monica's user avatar

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