17
Banks don't necessarily use the same formula, but in most countries they must disclose the effective interest you'd be paying (which may vary from the nominal interest due to extra charges and calculation differences) and explain how your payment is calculated.
In some countries banks are required to precalculate and provide the amortization schedule for the ...
5
The mathematics on which the usual formula is based is that the sum of the payments d, each discounted to present value (PV) by 1/(1 + r)^k, should equal the initial (present value) value of the loan s.
The summation can be converted to a formula by induction, so
r is the periodic interest rate, so if the APR is a nominal annual rate compounded monthly r = ...
4
You seem to regard the owner-occupied rules as paperwork peccadilloes to overcome. The intent of these rules, rather, is that you indeed occupy (i.e. live in, reside in full-time) the abode that you tell a lender will be owner-occupied. To do otherwise would be to commit federal crimes such as mortgage fraud while you launch your real estate endeavor.
4
A "cash-out" refinance is just borrowing more than you currently owe, and "buying points" is just prepaying interest upfront. How good a deal the points are depends on how long you plan to keep the mortgage. Typically the points have about a 5 to 10 year payback period, so you would need to keep the mortgage at least that long to make the ...
4
Yes, interest on a mortgage is deductible from your income, but only if you itemize deductions, which many do not. For many people, it's better to take the standard deduction unless you have a very large mortgage (paying more in interest than the standard deduction) or have other deductible expenses like state and local taxes (which are currently capped at $...
4
The rules for self-directed IRAs are pretty restrictive. Basically all of the investments and cash flow must stay within the IRA, and they can't be used for personal (or immediate family) benefit. So for example you can't live in a house that's owned and paid for by the IRA. You can use it to purchase investment property, but again all cash flows must stay ...
3
Would I have to worry about any tax liability? it would not be like he
is "giving me" the house as I would be assuming the mortgage.
He would be selling you the house.
Also wondering who the title of the house goes to when someone else
assumes a mortgage.
You would be the owner.
If I were to assume the mortgage from him how would that work?
If ...
3
IRAs cannot deal with their beneficiary (see prohibited transactions). Using the Self-Directed IRA to pay off a mortgage for which you personally is responsible would disqualify your IRA. Alternatively using the IRA to purchase the property from you so that the IRA can be put on the mortgage would be self-dealing and also disqualify the IRA.
You can't borrow ...
3
It depends as there are at least five varieties of Islamic home financing: Murabahah, Bay Bithaman Ajil, Musharakah Mutanaqisah, Ijarah Muntahiya Bit Tamlik, and Istisna (new constructions only). Most common (in US anyway) is probably Murabahah.
Assuming we're talking about Murabahah, what's happening is the bank acquires the property (directly or though a ...
2
The answer depends entirely on the new lender. In some markets, different lenders have their own favorite appraisers and don't trust other appraisers' calculations. Thus, an appraisal from Lender A's pet appraiser might not be acceptable to Lender B. Appraisals generally incorporate comparisons to recently sold similar properties in similar (or the same) ...
2
Presently the way bi-weekly payments are done for home loans is the monthly payment is calculated normally but the borrower pays half the payment amount every two weeks. Every month has two or three such payments, so when there are three you apply against principal as usual. Every year has 26 or 27 such payments depending on the calendar.
Bi-weekly is very ...
2
I can't speak to the legal frame work in Switzerland, but typically in the US, if the mortgagee (the bank) goes bankrupt, the mortgage will be sold to another lender and the funds raised will be used to pay off the mortgagee's creditors. The principal and payment schedule for the mortgage will typically not be affected. You'll just make the payments to a ...
2
What may happen is that you get 100K CHF out of your liquid deposits from the insurance and lose the remaining 200K (or, rather, become a creditor to the failed bank, in line with all the other creditors, and the bankruptcy court will determine how much of this 200K you'll eventually get).
The mortgage on the other hand is the asset of the bank and will be ...
2
I had a mortgage in the UK starting in 1990 which did not follow the standard formula.
12 months' interest on the outstanding balance was debited to the account at the anniversary date and I had to write my own formula.
1
Yes, paying off the mortgage is a better idea that leaving the money in the bank regardless of inflation. Even if there were no inflation, you'd be earning a 4% "return" by saving on interest in future payments, putting more toward the principal and increasing you're equity.
The drawbacks are that the equity in your house is much less liquid that ...
1
If you prefer to have your own spreadsheet and you're using Excel for a standard 12 monthly payments per year, the formula for monthly payment is:
=ROUND(LoanAmount/((1-((1+InterestRate/12)^-(Years*12)))/(InterestRate/12)),2)
For a reality check, if --
LoanAmount = $100,000 and InterestRate = .05 or 5% and Years = 30 then the monthly payment is $536.82.
For ...
1
What controls this is who is named on the note that is secured by the mortgage. The fact that your mortgage was sold doesn't matter at all and nobody can be added as a debtor without their permission.
Unless you were an owner of the property, the quit claim deed means nothing. What you are saying by that is that "I don't know who owns this but it's ...
1
Both quotes seem to equate "biweekly" with "semimonthly", which are not the same. With biweekly payments, there are two calendar months each year in which you make three payments, not two.
If you want to compare a monthly mortgage to a biweekly mortgage, you would first have to compute your total payments for the year (monthly times 12), ...
1
Usually it depends on how recent the first appraisal was. The lender will be able to tell you based on when the previous appraisal was done whether it can be used, but if it is relatively recent they should be able to use it on a refinance.
1
If the mortgage is not FHA, USDA or VA, it's not assumable unless you create and use a trust:
Conventional loans are not typically assumable because they almost
always contain a "due on sale" clause in their loan documents,
requiring that the mortgage be paid off if the property is
transferred.
There are also situations where you can transfer a ...
1
If you have enough cash that all three options are available to you, then I think you are better off asking what would make you happy rather than trying to optimize your wealth generation.
Would you rather rent or own? Some people don't want to deal with the hassles of maintaining a home and others want the freedom to do what they want with their home. ...
1
What we went with is a simpler version of my post. For my initial idea I was treating it as if someone was spending a fixed amount of money into stock each month while the stock goes up in value. And because the stock goes up in value you buy less each month.
My mortgage however is fixed. It stays the same even if the house increases or decreases in value. ...
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