rxz123
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A friend of mine called to inform me he had gotten some great news in the mail.
He received a letter from a lender in California informing him they would give
him a $310 Zack
Kassian Oilers Jersey ,000 mortgage and his monthly payment would
only be $999! "Think of the house I could buy," he told me excitedly! "I know I
could qualify to make a monthly payment for twice as much and if I sell my house
which has a $200,000 equity and we use it for a down payment, I could get a
million dollar house! Wow! What am I waiting for?"
His figures were only
slightly off. If he had a $200,000 down payment and he could lock in a $1,998
monthly payment on a $620,000 borrowed amount, he could afford a property priced
at $820,000. However Wayne
Gretzky Oilers Jersey , since I was suspicious of the kind of
mortgage he was talking about, I told him to bring his letter to me and we could
figure out exactly what he could qualify for. Instead, he invited me to his
house. I thought it was a good idea because he has a billiard table and it might
be some consolation to him, that as I was putting his dream of living in a
mansion on hold, he would be annihilating me at 8ball.
I came to his
house prepared. I found out that a $310,000 mortgage for 30 years with a $999
monthly payment is a 1% interest mortgage. Then, when I read the proposal he had
received, it was as I had expected. What this letter was offering was a negative
amortization mortgage.
I had to read some very small print but after I
did, here's what I found out. Once you close on the $310 Ryan
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which they will accept a minimum monthly payment of only $999. During these
three years, regardless of what you're paying, the mortgage is a 7%
mortgage.
In order to amortize normally, or be paid off normally, a
$310,000 mortgage at 7% for 30 years requires a monthly payment of $2,062.44.
This $2,062.44 includes interest and principal. In the early stages of a
negative amortization mortgage Ryan
NugentHopkins Oilers Jersey , no principal is paid. The entire
payment goes toward paying the interest on the loan. The interest due on the
first payment of this loan is $1,808.33. Since the payment will be $999, $809.33
($1,808.33$999) will be added to the principal. Since this mortgage will have a
principal that is increasing instead of decreasing, it is what is known as a
negative amortization mortgage.
With the terms of this mortgage, it
would accumulate $32,316.76 more debt over 3 years, which when added to the
$310,000 original mortgage Paul
Coffey Oilers Jersey , totals $342,316.76 principal owed. When the
negative amortization period of the mortgage ends, the mortgage becomes a
regular mortgage. In this case, that happens after 3 years. Then, there is 27
years left to pay the $342,316.76 owed at 7 %. This would take a monthly payment
of $2,354.51. A far cry from $999 a month!



Wednesday, July 12, 2017 at 5:59:21 AM 