Bank, can you provide me the remainder of the amount I require for that home, which is basically $375,000 (buy to let mortgages how do they work). 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 appear like, uh, uh, a good guy with a great task who has a good credit rating.
We have to have that title of the house and as soon as you pay off the loan we're going to offer you the title of your home. So what's going to occur here is we're going to have the loan is going to go to me, so it's $375,000, $375,000 loan - how does chapter 13 work with mortgages.
However the title of your house, the file that says who actually owns the home, 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, perhaps even the seller's bank, perhaps they have not settled 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 vowing 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, indicates promise, I'm, I'm a hundred percent sure I'm mispronouncing it, however it comes from dead promise.
Once I settle the loan this promise of the title to the bank will die, it'll return to me. Which's why it's called a dead promise or a mortgage. And probably since it comes from old French is the reason that we do not say mort gage. We state, home loan.
Not known Details About How Do Recverse Mortgages Work?
They're really referring to the home loan, mortgage, the home 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 really show you the math or in fact reveal you what your mortgage 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 really, even much better, simply go to the download, just go to the downloads, downloads, uh, folder on your web browser, you'll see a bunch of files and it'll be the file called mortgage calculator, mortgage calculator, calculator dot XLSX.
However simply go to this URL and after that you'll see all of the files there and then you can just download this file if you wish to have fun with it. how do down payments work on mortgages. However what it does here is in this sort of dark brown color, these are the assumptions that you might input and that you can change these cells in your spreadsheet without breaking the whole 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 talked about right over there. And after that the, uh, loan amount, well, I have the $125,000, I'm going to need to borrow $375,000. It calculates it for us and then I'm going to get a quite plain vanilla loan.
So, thirty years, it's going to be a 30-year set rate home mortgage, fixed rate, repaired rate, which means the rates of interest won't alter. We'll speak about that in a bit. This 5.5 percent that I am paying on my, on the money that I borrowed will not alter over the course of the thirty years.
Now, this little tax rate that I have here, this is to in fact find out, what is the tax savings of the interest reduction on my loan? And we'll talk about that in a second, we can overlook it in the meantime. how do second mortgages work in ontario. And then these other things that aren't in brown, you should not tinker these if you actually do open this spreadsheet yourself.
The Only Guide to How Do Mortgages Work After Foreclosure
So, it's actually the yearly rate of interest, 5.5 percent, divided by 12 and a lot of home loan are compounded on a regular monthly basis. So, at the end of monthly they see how much money you owe and after that they will charge you this much interest on that for the month.
It's in fact a quite interesting problem. But for a $500,000 loan, well, a $500,000 house, a $375,000 loan over thirty years at a 5.5 percent interest rate. https://marcotgnt991.tumblr.com/post/628240002943500289/h1-style-clearboth-id-content-section-0-how My mortgage payment is going to be approximately $2,100. Now, right when I purchased your house I desire to present a bit of vocabulary and we've discussed this in some 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 an asset. It's a possession due to the fact that it gives you future advantage, the future benefit of having the ability to reside in it. Now, there's a liability versus that possession, that's the mortgage, that's the $375,000 liability, $375,000 loan or financial obligation.
If this was all of your assets and this is all of your debt and if you were basically to sell the properties and settle 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 timeshare exit team fees the bank.
However if you were to unwind this deal right away 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 precisely what your original deposit was but this is your equity.
Indicators on How Do Escrow Accounts Work For Mortgages You Need To Know
But you could not assume it's consistent and have fun with the spreadsheet a little bit. But I, what I would, I'm introducing this since as we pay down the debt this number is going to get smaller. So, this number is getting smaller, let's say eventually this is just $300,000, then my equity is going to get larger.
Now, what I've done here is, well, really before I get to the chart, let me really reveal you how I compute the chart and I do this throughout thirty years and it goes by month. So, so you can envision that there's actually 360 rows here on the actual spreadsheet and you'll see that if you go and open it up.
So, on month absolutely no, which I do not show here, you borrowed $375,000. Now, over the course of that month they're going to charge you 0.46 percent interest, keep in mind that was 5.5 percent divided by 12. 0.46 percent interest on $375,000 is $1,718.75. So, I haven't made any home mortgage payments yet.
So, now prior to I pay any of my payments, rather of owing $375,000 at the end of the first month I owe $376,718. Now, I'm a great man, I'm not going to default on my home loan so I make that very first mortgage payment that we computed, that we determined right over here (how do commercial mortgages work).