New answers tagged

2

It depends on your mortgage company, and how they've set up their web site**. If you happen to be with Bank of America, when you make a payment, you'll be given an option to include an extra amount. If you check this, you then get a choice whether the additional amount will be applied to principle, escrow*, or "other", which I suppose could include such ...


2

You'll have to read your mortgage contract and/or ask the mortgage company. Let's say you have a 30 year mortgage with fixed interest rate, and you are supposed to pay $1,000 every month. This month you pay $2,000. One way the mortgage company can handle this (which is not very nice for you financially) is to stash the $1,000 away, and if you don't pay ...


6

In your title you ask what happens typically. In the body of the question you ask if you have to specify how the extra payment will be treated. The answer is you have to ask your lender about your loan. My loan is through my credit union. I can make an extra payment anytime I want. The form on the website allows me to specify if the payment is to be ...


0

In the Netherlands for a mortgage they expect that you pay 2% of your debt each month. For student debt (before 2015) it is 0,75% and for newer ones it is 0,45%. You can go to an Mortgage advisor and request and 'introduction meeting'*(These are free). You can ask the question an maybe they can answer them. Some (smaller) mortgage providers don't want '...


4

Mortgage rules differ by country, and within a country they further differ by the lender. Assuming this is in the US, and based on my limited experience (2 mortgages), you can only add extra payment on top of a regular payment. For example, if your regular payment is $1000, and you want to pay $500 extra, you make $1500 payment. Regular portion of the ...


0

To make it simple I'll consider a 50% mortgage, and assume you have enough to buy one house outright. Monthly costs. If you own one house outright, your costs are maintenance, and any fees you're paying your estate agent. If you own two properties with mortgages, you now have much higher monthly costs. Rental income. By buying two houses you now have double ...


3

Say I Sell my investment property house for 500k and bought it for 250k. Leaving me 250k profit. So far so good. I'd be taxed on 50% of that correct: 250/2 = 125k taxed. and 125k Profit. No. 50% of your profit counts as taxable income. 50% of it is tax free. So $125K of the profit is taxable, but that doesn't mean you pay $125K tax. So you add $...


8

It sounds strange, but is partially a matter of idiosyncratic terminology. There are three components to what you pay for a Danish morgage: Repayments of principal. "Interest", which is forwarded to the owners of the covered bonds that funded the mortgage. (This might be either a fixed rate or contractually specified to depend on interbank rates in a ...


1

The current accepted answer is essentially correct—the inflation rate cannot simply be deducted from the interest rate. However, it underestimates the real cost of the loan by about the same amount as the naïve method overestimates when the mortgage interest deduction is taken into account. The mistake is that it applies inflation discounting to a fixed ...


1

I just dealt with the same thing. I think some are misunderstanding the situation. I used a broker to get a fast loan on the perfect home that came out of nowhere. He and his team did a great job and got me a great rate at the time. That was before the 10 year took a nosedive. It was about 2 months after closing that I was wrapping up the refi. Was going ...


4

A decision in principle creates a soft credit search on your records, once you decide to proceed with the mortgage offer then they perform a hard credit search. There are no charges for a decision in principle from UK mortgage lenders, but it can be a lot of paper work to go to each individually. What I would highly recommend, and what I did myself, is to ...


8

Regular remortgaging at the end of a fixed rate period is a standard feature of the UK mortgage market, so you shouldn't be too worried that you're being sold something fundamentally dodgy. If the new mortgage fits within the usual affordability/LTV criteria, there's no reason you won't be able to change to it. Though of course mortgage advisers/providers ...


0

The main questions are: What's your interest rate (both before and after) ? Are you going to invest the money you save ? You're saying time to pay off closing costs is 4 years, but what does that mean ? Does that mean that it'll take you 4 years to get back to the same principal amount that you have now ? In that case it doesn't seem like it's worth it. ...


1

After noticing a few more things that had changed since the initial loan estimate (mostly closing on the pending sale of our current house), our broker agreed to close out the initial loan "file" (the broker's term) and start over from scratch. This apparently creates more work for them and adds to the delay than if we had just signed the first set of ...


2

4 years seems a little high for a break-even point. One rule of thumb I've seen is that you should refinance if you can reduce your rate by 1% or more. I assume you're rolling your closing costs into the new mortgage, which increases your principle and raises your payment, lessening the improvement. If you can afford to pay $2,100 per month, then look at ...


14

Shop around various local banks for a construction loan. It's essentially a line of credit that will be collateralized by the new house as it's built. Part of that loan will need to go towards the demolition of the old house (which won't be much compared to the cost of the new home) and the clearing of the lot. One problem you might have is that your new ...


1

With awareness that this question is many years old, it bears mentioning that the other answers all essentially assume that the loans are equivalent on all terms aside from the down payment (and impact to monthly payments as a result of a different down payment). It's important to note that this may not be the case. It would be somewhat rare for a 10% ...


0

Mortgage is borrowing money. Borrowing is like renting. Renting short term is cheaper than renting long term. If the rent rate is fixed but term is not, you want to "return" the rented money as soon as possible. This means paying off the debt ASAP (even before it's due) to avoid paying interest. Sometimes, mortgages have an early payment clause that allows ...


0

Assuming taxes, repairs and insurance are covered by the renter, then the internal rate of return depends entirely on your assumptions regarding the salvage value of the home. If you assume the home will have no net value at the end of thirty years, then you will take an annual loss of 2% per annum. If you assume you will recover $1,000,000 nominal dollars ...


3

It's certainly legal. Since you will be paying this loan back, however, the bank will need to count the payments against you in determining how much you can afford to pay each month (your debt to income ratio). That will likely decrease the size of the mortgage you can qualify for. It is generally not a great idea. Taking out a loan that reaches or even ...


1

It depends on if you can get a better return on your money than 2.5% (adjusting for tax deductibility of the mortgage interest). If so, you should get a mortgage for as long as possible. If not, as short as possible, while still being able to afford the payments.


1

My suggestion is to use half of your savings ($50k) for your down payment and leave the rest for your emergency fund, without any investment. This assuming your comment about the $100k actually being your savings is true. First off, never assume you are going to be constantly employed for any length of time. Not 15 years, not 15 months. You likely don't ...


0

Depending on questions asked in the comments (regarding PMI) I think your best course of action is: Don't put any money down. Don't invest all of your savings. Keep an emergency fund of 6 months of mortgage payments (more depending on the levels of social safety nets, most importantly how well/badly you'd do on unemployment). Invest the rest into a safe-...


0

It looks like none of the other answers actually addressed your question properly. Your question was: If I lend my son $X today, and have him pay me the current bank interest rate on deposits for the remaining term of the loan, how much of a "gift" have I given him? You wanted to use this information to determine how you could give a similarly sized gift ...


4

The OP has made it clear that she is interested in exactly how the two gifts can be made equal, considering that the gift to the daughter will come years (in a comment she says perhaps ten years) after the gift to the son. Other answers have talked about present value, and writing a provision in the mother's will to insure that the daughter does actually ...


3

I second NoAnswer's answer in general. I would strongly advise you to discuss what you are proposing with both children in advance, separately then together, to get their explicit consent only after listening carefully to what their reactions are, and most importantly to put all sides of the deal in writing. At the very least there should be a will ...


5

This won't be a short process and while you may not like it but there is a clear path to home ownership with a mortgage. You will need to settle all your debts. Even if your CS was over 800, a lender will not approve you with collections on your account. Luckily you have cash. Follow the typical advice when settling a debt: never give access to your ...


8

The reason this is so confusing is that 3 different forces are acting on this mess at once. Giving a gift to one child (and not the other) Lending money to one child (and not the other) Investing your own money for a viable return I get where you are trying to create synergy here, but this is creating an overload. In our culture, dealings with money ...


3

Assuming strong family ties, you could just talk to your kids. Both of them. At the same time. In my family, we have agreed that I give my mother money for home repairs and get a signed loan contract with 0% interest, which will increase my share when inheriting the home in what I hope will be quite some decades in the future. For my location (Germany) this ...


0

Have you talked to your younger daughter and asked her how she feels? The important thing here doesn't seem to be that you feel that you were treating them evenly, but that she feels that you're being fair - so talk to her and find out what would make her feel comfortable. Instead of trying to figure out a fair way to do it on your own and then dictating ...


3

Assuming you aren't offering a better interest rate than the current mortgage then on day 1 you won't be giving your son any gift. The gift will be given at the point in time you decide to write off the loan. So to keep it simple, you could gift your daughter the same amount that you write off and at the same time as the write off. Or alternatively, gift ...


2

This may not be the kind of an answer you are looking for, but let me offer an alternative prospective. For one, the money is yours, but at the same time, its your families. Your eldest needs the money right now, its nothing to do with being fair. If and when your daughter is in need of any money, this also sets a precedence that you will be there to support ...


11

can promise the same cash amount later, but how do I financially value the benefit my son gets now? I suppose your question is outlined above. You want to give money X Amount to your son now and same amount X to your daughter, but later, and wondering if that is fair. In a positive interest rate environment "dollar today is worth more than a dollar ...


15

If you want to be fair then be fair. It sounds like you wish to gift this money so offer it as a gift. Hi kids, I have an extra £xyz lying around so I would like to give each of you half. If this is truly a "no strings attached" gesture then I would like to add that you are a very generous parent. If this is a dirt-cheap write-off loan you wish to offer ...


0

Not quite the question you were asking, but there are a few products such as YBS's Offset Plus for Savers that allow you to use your savings to counteract someone's interest payments. This may help to keep the playing field slightly more level in that you're not actually giving them money, you're just reducing their interest payments (in exchange for not ...


4

In the US, these are to my knowledge not a huge concern from a "collateralizable" standpoint. They will be factors in the market value of the home, certainly, and the LTV (loan-to-value) ratio is crucial. In other words, a $200k house made of brick is worth the same as a $200k house made of sticks. They will also be a factor in how much you pay for ...


-1

Brick homes aren't built in the US anymore. It's all stick frame with a brick facade. (I'm sure there's the occasional Rich Eccentric who builds solid brick, but that doesn't count.) And flood insurance is what morphs a bunch of sticks in a flood plain from impending disaster into a house they will write a mortgage for.


-1

Consider this: You borrowed from the bank $100000 at fixed 5% interest rate. Let's assume for simplicity it's a bullet loan where you pay ALL interest and the full borrowed amount after 10 years, i.e. you pay $100000*1.0510 = $162889.46 after 10 years. Market rates become lower, reaching 0%. Now if you pay the bank $100000, where is the bank going to ...


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 ...


76

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 ...


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