97

Transfer the ownership of the house now. If you have broken up and your SO has moved away you don't want them to have a share in the house you are living in. They can cause you a lot of trouble down the line, including: vanishing and never paying you back any loans; preventing you selling the place when you want to (by refusing or just by not being ...


94

They want to gauge the chance of a successful sale. There's nothing quite as frustrating when selling and moving to a new home as getting into escrow, doing all the paperwork, crossing off all the check lists, only to find out that your buyer didn't qualify for the loan and the mortgage fell through. By asking about your down payment (20% or more is often ...


75

Loaning money to close relations tends to end poorly. You are better off not loaning your older child money. This solves all your issues except for one. You mention that your cash savings are earning "almost nothing". Is this an emergency fund, or money that can be invested? If it is an emergency fund, you have yet another argument against paying off ...


69

You're borrowing money from someone else, and "interest" is the cost for borrowing money. There's no Greedy, Evil Bankers conspiracy at all: it's just math that the cost is high when you owe a lot. This should incentivize you to: borrow as little as possible, and pay extra early in the loan. (What is a Greedy, Evil Bankers conspiracy are pre-payment ...


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 ...


57

I can use that property to get a loan for another real estate? Or that's not how loans work? That's not how secured loans generally work. You could get a mortgage on your rental property, but the bank will most likely ask why you are getting a loan (to find out if it is because you are in financial distress). You might as well just buy the second property ...


56

Two mortgages with the same interest rate and same monthly payment are identical in their total cost and time-to-repayment, regardless of the loan term. The big caveat here is that the 25-year and 30-year mortgage rates are in fact identical, and that there is no prepayment penalty on the mortgage. So long as that is the case, you can take a 30-year ...


53

This is 100% routine and happens in almost every home sale. Whoever you're buying from probably owes a mortgage too! This gets handled during closing, and it's "behind the curtain". You/your finance company hands over a check for the full purchase price to the escrow agent, a neutral middleman who assures proper money flow. The escrow agent splits the ...


52

Private mortgage insurance protects the lender if you stop making your mortgage payments. It does not benefit the borrower in any way, aside from the fact that many lenders require it if your down payment isn't large enough. Paying for PMI is essentially paying for insurance to protect someone else's investment - if you're not required to do it, there is no ...


48

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 ...


47

As RonJohn points out, selling a house that still has an outstanding mortgage balance is very common. However, having a mortgage can make it harder to sell, one situation to consider is if the local real-estate market takes a dip after you buy. Say you put 5% down on a $150k house at 5% interest, in 3-years you decide to move, but the market value of the ...


46

The student loans are gone, all lenders see is a 2nd mortgage. Since the mortgage is secured by the home you'd likely have a hard time getting a better rate on an unsecured loan, but it doesn't hurt to go chat with some lenders and see what options exist. I imagine the best chance for a lower rate would be a re-finance on the first mortgage (assuming there'...


40

the highest offer we could make is substantially below the asking price by around 5%. I wouldn't necessarily call that 'substantial', especially if the property has been on the market some time (I surmise this from "sales in our local area are slow"). That you are ready to proceed also makes you a strong contender, and reduces the window of opportunity for ...


39

Say I can lend money at a 10% rate. I lend you $10,000 and the note is for $11,000 due in one year. But, the next day, I can sell the note for $10,100, the buyer willing to get a return of 8.9%. ($11K/$10.1K). Why would I lend that $10K for a year, when I can turn over the loan and make 1% in a day? The mortgage is more complex, of course. But the concept ...


38

Each of the recent changes you listed has the following effect on your credit score: $4K on credit line: increases your debt utilization. The smaller the denominator (sum of all credit limits of CC's and lines of credit) the more this will lower your score. The good news is, within 30 days of paying that off your score will jump back up. Co-signing a $20K ...


33

Does it make sense for me to keep the house Are you willing to be a landlord for $91 a month? What happens if your house goes unrented for 3 months? 6 months? How will you pay its mortgage? In my opinion, you don't have enough buffer to make this worth the risk. If you could afford for it to go unrented for 6 months then it might be a good investment in ...


32

You've really answered your own question, without even needing to go into the financial details. "I just don't like the idea of getting in debt and not being able to move any time soon." If you want to be able to move at short notice, home ownership is not for you. OTOH, if you plan to stay where you are, like gardening, auto mechanics, woodworking, or any ...


29

It's that 4th note which concerns me. It's the idea of committing to 30 years of debt. You're grossly over-thinking a problem that got solved the day after mortgages were invented. https://blogs.findlaw.com/law_and_life/2017/07/can-you-sell-a-home-if-you-still-owe-on-your-mortgage.html Most people sell their homes before the mortgage is paid. What ...


29

When you pay points on a mortgage, you're paying to offset interest. The payment is essentially a fee, and does not decrease principal. In your example, if you pay $1,000 against a $100,000 mortgage, you're paying one point (one percent of the mortgage amount) and you're getting a .25% discount on interest as a result. You still owe $100,000 in principal. ...


28

Gifts are not taxable income to the recipient. In the US, gift tax is paid by the giver, not the recipient. However, there is an annual gift exclusion amount (currently $15,000/year). Any gifts under that amount are not taxable and don't need to be reported to the IRS. This limit is per person, so your parents could give you up to $30,000 and have no ...


28

I started writing this as a comment, then realized it may be better suited as a frame challenge to your question. RonJohn's answer correctly addresses the fact that interest is the cost you pay to borrow money, but there's an underlying problem with your assumptions. You made the statement, It seems to me that a large number of mortgages are refinanced ...


27

I tend to follow the Keep It Simple, Stupid principle. Next year at the same time when I give my college student daughter some money for a car, I'm going to give her brother an equal amount of money. (I'll suggest that he add it to his own Car Down Payment Fund -- or if he buys a car by then -- apply it to the loan principal, but it'll be a gift and he can ...


26

Maybe from a Credit Union or other smaller bank, but not a big-box bank. why the lack of flexibility? There is a huge secondary market for mortgages through the MBS (Mortgage-backed Security) market. This market consists of millions of mortgages that have sold by banks to other institutions, that package thousands of them together into "bonds" that are ...


25

I have a friend who is a mortgage broker. At the company he works for, if one of his loans is paid off within 6 months of origination, he loses his commission. It's only happened to him a few times in 9 years, and he had to repay the commission on those loans in the form of future paycheck reductions. In his case 2 large loans happened in the same month ...


24

I will say, it is (A) Possible (B) No, as you are getting very cheap money at 2.75% on your mortgage and your 401K is giving you 10+% and even if it decline to average of 7% or less, you are still making a lot in long run. And if you withdraw funds from 401k, you will be paying taxes. (C). As outlined in B, you will pay taxes on 401k withdrawal as those ...


23

It is important to differentiate between corporate and governmental policies. It is unlikely that the governmental policies are that draconian. However, it is plausible that corporate policies are exactly that. If customer A does not meet these guidelines, then the answer is "No". There is another possibility, if you have already been turned down. ...


22

The typical home mortgage is amortized to give you a consistent payment amount through the duration of the loan. What you'll see is that each month a greater portion of your payment goes to principal rather than interest. When looking at loan calculators look for ones that show the full amortization schedule to get a good picture of how the variables ...


21

The best way to understand insurance policies in general is to consider who gets paid, and under what circumstances. Simply put, PMI policies pay your lender. The condition under which they pay is if you default, and the bank is not able to recover the balance of the loan. If you buy a house for $100,000 with $10,000 down and a $90,000 loan, and then you ...


19

If the appraisal is less than the purchase price and the down payment is small, the bank might not approve the mortgage.


19

I think what you are looking for is a reamortization or recasting. Basically, after you make a lump sum or few extra payments you can ask the bank to recalculate your mortgage payments based on the remaining balance keeping everything else the same. This is done for a fee though it should be less than closing costs if you were to refinance. See Investopedia: ...


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