The headache mortgage interest can bring

2007-03-08 10:33:40

( Financial )



In law, a mortgage is a transfer of property as security for the payment of a debt, etc., with an agreement that the transfer is void when the debt is paid.

There is something that makes your mortgage loan payoff higher than your principal balance and that is what is called mortgage interest. Mortgage interest is what your lender is adding that you have yet to pay for your current lender. To refinance interest rates, there would be an ordering of your new loan officer of a final payoff from your old lender. And this would be your current principal balance, which would be confirmed on your credit report, plus your unpaid interest.

Mortgage loan interests are paid in terms of your amount overdue, or backwards. Mortgage loan interest rates accumulates daily until you have paid your mortgage on the first of the following month, which makes it very different from rent where you pay for the next month. Your payment for the next month of December 1 is the interest that accumulated every day for the past month, November. Now when your lender receives your payment and you’re scheduled to close on the 15th of the month, your payoff will serve as your principal balance, added to the interest for your three-day recession period, added to your ensued interest to the 15th.

Now there is what we call low interest mortgage. Assuming a mortgage, you take over the mortgage of the seller with the same rate the seller is paying. That rate may rank below the current market rates yet you still have to take over that current mortgage rate and mortgage interest. Almost all sellers years back, could be able to transfer their low-rate mortgages to their buyers. But by the early 80’s, the infamous Paragraph No. 17 “due on sale” clause was included in most of the lenders’ mortgage contracts. This “due on sale” clause bans routine assumptions, plus, it requires sellers to pay off their mortgage balance upon sale or long-term lease.

Consequently, people nowadays mistakenly believe that all assumption possibilities are gone. Plus, loan representatives rarely inform borrowers about assumptions because these agreements take place directly between sellers and buyers only.

So now, you cannot simply say that you would want one of those low interest mortgages or low interest loans that would help you save lots of dollars. Now you must locate a seller who has a real estate loan before you can assume one.


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