Table of Contents4 Easy Facts About What Is The Interest Rate Today For Mortgages DescribedAn Unbiased View of Why Do Banks Sell Mortgages To Fannie MaeTop Guidelines Of What Is The Current Apr For Mortgages
There are extremely rigorous laws that were passed in current years that need loan providers do their due diligence to offer you all the choices possible to bring your home mortgage current or exit homeownership gracefully. how do second mortgages work. By comprehending how your mortgage works, you can safeguard your investment in your house, and will know what actions to take if you ever have difficulties making the payments.
What I want to do with this video is discuss what a mortgage is but I believe most of us have a least a general sense of it. However even better than that really go into the numbers and understand a little bit of what you are actually doing when you're paying a home loan, what it's comprised of and how much of it is interest versus just how much of it is actually paying for the loan.
Let's state that there is a home that I like, let's say that that is your house that I want to buy. It has a cost of, let's say that I need to pay $500,000 to buy that home, this is the seller of your home right here.
I wish to purchase it. I want to purchase your home. This is me right here. And I've been able to save up $125,000. I have actually had the ability to conserve up $125,000 but I would really like to reside in that home so I go to a bank, I go to a bank, get a brand-new color for the bank, so that is the bank right there.
Bank, can you lend me the remainder of the quantity I need for that home, which is essentially $375,000. I'm putting 25 percent down, this right, this right, this number right here, that is 25 percent of $500,000. why are reverse mortgages bad. So, I ask the bank, can I have a loan for the balance? Can I have a $375,000 loan? And the bank says, sure, you appear like, uh, uh, a nice person with a great job who has a great credit rating.
We need to have that title of your house and when you pay off the loan we're going to offer you the title of your home. So what's going to take place here is we're going to have the loan is going to go to me, so it's $375,000, $375,000 loan.
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However the title of your house, the file that says who actually owns your home, so this is the home title, this is the title of the home, home, house title. It will not go to me. It Go here will go to the bank, the house title will go from the seller, maybe even the seller's bank, maybe they have not paid off their home mortgage, it will go to the bank that I'm borrowing from.
So, this is the security right here. That is technically what a home mortgage is. This vowing of the title for, as the, as the security for the loan, that's what a home loan is. And in fact it comes from old French, mort, suggests dead, dead, and the gage, https://www.globenewswire.com/news-release/2020/03/12/1999688/0/en/WESLEY-FINANCIAL-GROUP-SETS-COMPANY-RECORD-FOR-TIMESHARE-CANCELATIONS-IN-FEBRUARY.html indicates promise, I'm, I'm a hundred percent sure I'm mispronouncing it, however it originates from dead promise.
When I settle the loan this promise of the title to the bank will pass away, it'll come back to me (what are points in mortgages). And that's why it's called a dead pledge or a mortgage. And most likely due to the fact that it originates from old French is the reason why we don't say mort gage. We say, mortgage.
They're really describing the mortgage, home loan, the mortgage. And what I desire to carry out in the rest of this video is utilize a little screenshot from a spreadsheet I made to actually reveal you the mathematics or really show you what your home loan payment is going to. And you can download, you can download this spreadsheet at Khan Academy, khanacademy.org/downloads, downloads, slash home mortgage calculator, home mortgage, or actually, even better, simply go to the download, simply go to the downloads, downloads, uh, folder on your web internet browser, you'll see a bunch of files and it'll be the file called home loan calculator, mortgage calculator, calculator dot XLSX.
But just go to this URL and then you'll see all of the files there and after that you can just download this file if you desire to have fun with it. However what it does here remains in this type of dark brown color, these are the assumptions that you might input which you can change these cells in your spreadsheet without breaking the entire spreadsheet.
I'm purchasing a $500,000 home. It's a 25 percent deposit, so that's the $125,000 that I had saved up, that I 'd discussed right there. And after that the, uh, loan amount, well, I have the $125,000, I'm going to have to borrow $375,000. It determines it for us and after that I'm going to get a pretty plain vanilla loan.
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So, thirty years, it's going to be a 30-year set rate mortgage, fixed rate, fixed rate, which suggests the rate of interest won't alter. We'll speak about that in a little bit. This 5.5 percent that I am paying on my, on the money that I obtained will not alter throughout the thirty years.
Now, this little tax rate that I have here, this is to actually determine, what is the tax savings of the interest reduction on my loan? And we'll talk about that in a second, we can disregard it in the meantime. And then these other things that aren't in brown, you should not tinker these if you actually do open up this spreadsheet yourself.
So, it's literally the annual interest rate, 5.5 percent, divided by 12 and many home loan are compounded on a monthly basis - which type of interest is calculated on home mortgages. So, at the end of monthly they see just how much cash you owe and after that they will charge you this much interest on that for the month.
It's really a quite interesting problem. However for a $500,000 loan, well, a $500,000 home, a $375,000 loan over 30 years at a 5.5 percent rates of interest. My home mortgage payment is going to be roughly $2,100. Now, right when I purchased your house I wish to present a bit of vocabulary and we've talked about this in a few of the other videos.
And we're presuming that it's worth $500,000. We are assuming that it's worth $500,000. That is a possession. It's an asset since it offers you future advantage, the future advantage of having the ability to live in it. Now, there's a liability versus that asset, that's the home loan, that's the $375,000 liability, $375,000 loan or debt.
If this was all of your possessions and this is all of your financial obligation and if you were basically to sell the assets and pay off the debt. If you offer your house you 'd get the title, you can get the cash and after that you pay it back to the bank.
