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There are very stringent laws that were passed in recent years that need lenders do their due diligence to give you all the options possible to bring your mortgage existing or exit homeownership with dignity. why do mortgages get sold. By comprehending how your home loan works, you can safeguard your financial investment in your house, and will know what actions to take if you ever have obstacles making the payments.
What I wish to do with this video is explain what a home loan is but I think most of us have a least a basic sense of it. However even much better than that really enter into the numbers and understand a bit of what you are really doing when you're paying a home loan, what it's comprised of and just how much of it is interest versus how much of it is in fact paying down the loan.
Let's say that there is a home that I like, let's say that that is your home that I wish to acquire. It has a cost of, let's state that I need to pay $500,000 to buy that house, this is the seller of the home right here.
I want to purchase it. I wish to purchase your home. This is me right here. And I've had the ability to save up $125,000. I've been able to conserve up $125,000 but I would actually like to live in that house so I go to a bank, I go to a bank, get a new color for the bank, so that is the bank right there.
Bank, can you provide me the rest of the quantity I require for that house, 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. reverse mortgages are most useful for elders who. So, I ask the bank, can I have a loan for the balance? Can I have a $375,000 loan? And the bank states, sure, you seem like, uh, uh, a great person with a good job who has an excellent credit ranking.
We have to have that title of your house and once you settle the loan we're going to offer you the title of your house. 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 document that states who really owns your house, so this is the house title, this is the title of your home, house, home title. It will not go to me. It will go to the bank, the house title will go from the seller, possibly even the seller's bank, maybe they have not settled their home loan, 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 promising of the title for, as the, as the security for the loan, that's what a home mortgage is. And really it originates from old French, mort, suggests dead, dead, and the gage, suggests pledge, I'm, I'm a hundred percent sure I'm mispronouncing it, but it originates from dead promise.
Once I settle the loan this pledge of the title to the bank will pass away, it'll come back to me (what is the current interest rate for commercial mortgages?). Which's why it's called a dead promise or a mortgage. And probably because it comes from old French is the reason that we don't state mort gage. We say, mortgage.
They're truly describing the mortgage, mortgage, the mortgage loan. And what I desire to carry out in the rest of this video is utilize a little screenshot from a spreadsheet I made to really show 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 loan calculator, mortgage, or actually, even better, just 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 mortgage calculator, home loan calculator, calculator dot XLSX.
However 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 wish to play with it. However what it does here is in this sort of dark brown color, these are the presumptions that you could input and that you can alter these cells in https://www.trustpilot.com/review/timesharecancellations.com your spreadsheet without breaking the whole spreadsheet.
I'm buying a $500,000 house. It's a 25 percent deposit, so that's the $125,000 Visit this website that I had actually conserved up, that I 'd talked about right there. And then the, uh, loan amount, well, I have the $125,000, I'm going to need to obtain $375,000. It calculates it for us and then I'm going to get a quite plain vanilla loan.
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So, 30 years, it's going to be a 30-year set rate mortgage, fixed rate, repaired rate, which means the rate of interest will not change. We'll talk about that in a bit. This 5.5 percent that I am paying on my, on the cash that I obtained will not change over the course of the 30 years.
Now, this little tax rate that I have here, this is to really find out, what is the tax savings of the interest deduction on my loan? And we'll discuss that in a second, we can ignore it in the meantime. And then these other things that aren't in brown, you should not tinker these if you in fact do open this spreadsheet yourself.
So, it's actually the annual rates of interest, 5.5 percent, divided by 12 and the majority of mortgage are intensified on a regular monthly basis - what is the current interest rate for commercial mortgages?. So, at the end of every month they see how much cash you owe and then they will charge you this much interest on that for the month.
It's actually a quite fascinating issue. 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 mortgage payment is going to be roughly $2,100. Now, right when I purchased your home I desire to introduce a little bit of vocabulary and we've discussed this in some of the other videos.
And we're assuming that it deserves $500,000. We are presuming that it deserves $500,000. That is a property. It's a possession because it offers you future advantage, the future advantage of being able to live in it. Now, there's a liability versus that property, that's the mortgage 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 financial obligation and if you were essentially to sell the assets and pay off the debt. If you sell your home you 'd get the title, you can get the money and then you pay it back to the bank.