Table of ContentsTop Guidelines Of What Is The Harp Program For MortgagesWhat Is Required Down Payment On Mortgages for DummiesThe 6-Minute Rule for How Long Do Mortgages Last
What I wish to finish with this video is describe what a home loan is but I believe most of us have a least a general sense of it. But even better than that in fact enter into the numbers and understand a little bit of what you are really doing when you're paying a mortgage, what it's made up of and just how much of it is interest versus just how much of it is in fact paying for the loan.
Let's say that there is a home that I like, let's say that that is your home that I would like to purchase (what are mortgages). It has a cost tag of, let's say that I need to pay $500,000 to buy that house, this is the seller of your house right here.
I would like to buy it. I would like to buy the house. This is me right here - how much can i borrow mortgages. And I have actually had the ability to conserve up $125,000. how mortgages work. I have actually had the ability to conserve up $125,000 but I would really 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 lend me the remainder of the amount I need 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. 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 look like, uh, uh, a good person with a good task who has a good credit rating.
We need to have that title of your house and once you pay off the loan we're going to provide 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.
But the title of your house, the file that says timeshare in tennessee who actually owns the house, so this is the home title, this is the title of your home, home, house title. It will not go to me. It will go to the bank, the house title will go from the seller, perhaps even the seller's bank, maybe they haven't paid off 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 loan is. And really it comes from old French, mort, implies dead, dead, and the gage, implies pledge, I'm, I'm a hundred percent sure I'm mispronouncing it, but it originates from dead pledge.
Not known Incorrect Statements About Which Of The Following Statements Is True Regarding Home Mortgages?
As soon as I settle the loan this pledge of the title to the bank will pass away, it'll return to me. And that's why it's called a dead promise or a mortgage. And probably because it comes from old French is the reason we don't state mort gage. why do banks sell mortgages. We say, mortgage.
They're truly referring to the home loan, home loan, the mortgage loan. And what I wish to carry out in the rest of this video is utilize a little screenshot from a spreadsheet I made to in fact reveal you the mathematics or really reveal 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 mortgage calculator, home loan, or really, 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 home loan 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 play with it. However what it does here is in this type of dark brown color, these are the presumptions that you might input which you can change these cells in your spreadsheet without breaking the whole spreadsheet.
I'm purchasing a $500,000 house. It's a 25 percent down http://manuelswoe364.over-blog.com/2020/09/some-known-facts-about-how-many-mortgages-in-the-us.html payment, so that's the $125,000 that I had actually saved up, that I 'd discussed right there. And after that the, uh, loan quantity, well, I have the $125,000, I'm going to need to obtain $375,000. It calculates it for us and after that I'm going to get a quite plain vanilla loan.
So, 30 years, it's going to be a 30-year fixed rate home mortgage, repaired rate, fixed rate, which suggests the interest rate will not change. We'll talk about that in a bit. This 5.5 percent that I am paying on my, on the money that I obtained will not alter over the course of the thirty years.
Now, this little tax rate that I have here, this is to really find out, what is the tax cost savings of the interest reduction on my loan? And we'll speak about that in a second, we can disregard it in the meantime. And after that these other things that aren't in brown, you should not mess with these if you in fact do open up this spreadsheet yourself.
So, it's actually the yearly rates of interest, 5.5 percent, divided by 12 and many home mortgage loans are intensified on a month-to-month basis. So, at the end of on a monthly basis they see just how much money you owe and after that they will charge you this much interest on that for the month.
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It's really a quite intriguing problem. However for a $500,000 loan, well, a $500,000 house, a $375,000 loan over thirty 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 the home I want to present a bit of vocabulary and we have actually discussed this in some of the other videos.
And we're assuming that it's worth $500,000. We are presuming that it's worth $500,000. That is a property. It's a property since it offers you future advantage, the future advantage of having the ability to reside in it. Now, there's a liability against that possession, that's the mortgage, that's the $375,000 liability, $375,000 loan or debt.
If this was all of your properties and this is all of your financial obligation and if you were essentially to sell the properties and pay off the debt. If you sell your house you 'd get the title, you can get the cash and after that you pay it back to the bank.
But if you were to relax this transaction instantly after doing it then you would have, you would have a $500,000 home, you 'd pay off your $375,000 in debt and you would get in your pocket $125,000, which is exactly what your initial deposit was however this is your equity.