Table of ContentsOur Reverse Mortgages How Do They Work PDFsFacts About What Does Ltv Mean In Mortgages RevealedThe 30-Second Trick For Who Does Reverse Mortgages
There are extremely rigorous laws that were passed in current years that require lenders do their due diligence to provide you all the options possible to bring your home loan present or exit homeownership with dignity. when to refinance mortgages. By understanding how your home loan works, you can secure your investment in your house, and will understand what actions to take if you ever have difficulties making the payments.
What I want to make with this video is discuss what a home loan is however I think most of us have a least a general sense of it. But even better than that really go into the numbers and understand a bit of what you are actually doing when you're paying a home mortgage, what it's comprised of and just how much of it is interest versus just how much of it is in fact paying for the loan.
Let's state that there is a house that I like, let's state that that is the home that I would like to purchase. It has a cost tag of, let's say that I need to pay $500,000 to purchase that home, this is the seller of your home right here.
I would like to buy it. I want to buy your home. This is me right here. And I've been able to conserve up $125,000. I've been able to save up $125,000 but I would actually like to live 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 amount 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. which of the statements below is most correct regarding adjustable rate mortgages?. 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 look like, uh, uh, a nice guy with a good job who has a great credit ranking.
We need to have that title of the home and when you pay off the loan we're going to give you the title of your home. So what's going to happen here is we're going to have the loan is going to go to me, so it's $375,000, $375,000 loan.
Top Guidelines Of When Did 30 Year Mortgages Start
But the title of your home, the document that states who really owns your home, so this is the home title, this is the title of your house, home, house title. It will not go to me. It will go to the bank, the home title will go from the seller, possibly even the seller's bank, maybe they haven't paid off their home mortgage, it will go to the bank that I'm obtaining from.
So, this is the security right here. That is technically what a home mortgage is. This pledging of the title for, as the, as the security for the loan, that's what a mortgage is. And in fact it originates from old French, mort, indicates dead, dead, and the gage, suggests pledge, I'm, I'm a hundred percent sure I'm mispronouncing it, but it originates from dead pledge.
As soon as I pay off the loan this pledge of the title to the bank will pass away, it'll return to me (how mortgages work). Which's why it's called a dead pledge or a mortgage. And probably since it originates from old French is the reason that we do not state mort gage. We say, mortgage.
They're really referring to the mortgage, home loan, the home loan. And what I desire to perform in the rest of this video is use a little screenshot from a spreadsheet I made https://www.globenewswire.com/news-release/2020/06/25/2053601/0/en/Wesley-Financial-Group-Announces-New-College-Scholarship-Program.html to in fact reveal you the math or in fact show you what your home mortgage payment is going to. And you can download, you can download this spreadsheet at Khan Academy, khanacademy.org/downloads, downloads, slash mortgage calculator, home mortgage, or in fact, even better, just go to the download, just go to the downloads, downloads, uh, folder on your web internet browser, you'll see a lot of files and it'll be the file called home mortgage calculator, home loan calculator, calculator dot XLSX.
But just go to this URL and after that you'll see all of the files there and then you can simply download this file if you wish to have fun with it. But what it does here remains in this sort of dark brown color, these are the assumptions that you could input which you can alter these cells in your spreadsheet without breaking the entire spreadsheet.
I'm purchasing a $500,000 home. It's a 25 percent down payment, so that's the $125,000 that I had actually conserved up, that I 'd spoken about right over there. And then the, uh, loan amount, well, I have the $125,000, I'm going to need to obtain $375,000. It computes it for us and after that I'm going to get a quite plain vanilla loan.
The Main Principles Of What Does Ltv Stand For In Mortgages
So, thirty years, it's going to be a 30-year fixed rate home mortgage, repaired rate, fixed rate, which indicates the rate of interest will not change. We'll discuss that in a little bit. This 5.5 percent that I am paying on my, on the cash that I borrowed will not change throughout the thirty years.
Now, this little tax rate that I have here, this is to really find out, what is the tax savings of the interest reduction on my loan? And we'll discuss that in a second, we can disregard it for now. And then these other things that aren't in brown, you shouldn't mess with these if you actually do open this spreadsheet yourself.
So, it's literally the annual rates of interest, 5.5 percent, divided by 12 and most home loan are compounded on a regular monthly basis - non-federal or chartered banks who broker or lend for mortgages must be registered with. So, at the end of every month 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 in fact a quite interesting issue. However for a $500,000 loan, https://www.elkvalleytimes.com/news/business/wesley-financial-group-provides-nearly-million-in-timeshare-debt-relief/article_4be24045-0034-5e07-a6ac-d57ec8d31fcd.html well, a $500,000 home, a $375,000 loan over thirty years at a 5.5 percent rate of interest. My mortgage payment is going to be roughly $2,100. Now, right when I bought your home I want to present a bit of vocabulary and we've discussed this in a few of the other videos.
And we're presuming that it's worth $500,000. We are presuming that it's worth $500,000. That is a possession. It's a property since it gives you future benefit, the future advantage of being able to live in it. Now, there's a liability versus that possession, that's the home loan, that's the $375,000 liability, $375,000 loan or financial obligation.
If this was all of your properties and this is all of your debt and if you were basically to offer the properties and pay off the financial obligation. If you offer the house you 'd get the title, you can get the money and after that you pay it back to the bank.