This topic contains 8 replies, has 5 voices, and was last updated by Anonymous 7 years, 8 months ago.
- April 30, 2011 at 4:18 am #418237
Looks like this is an interest only loan at 90.53%. That is odd. What about PMI?
Was there any mention as to whether or not the taxes and insurance were escrowed?
The taxes due at closing would more than likely go to the treasurer and not the bank.
I can only assume that he means monthly what would the total payment be that was sent to the bank. Assuming the taxes and insurance would be escrowed the amount should be 903+ 237.50 + 47.91 = $ 1,188.41.
Next time you have class, make a point of asking him to provide more clarity in the questions.
Don’t sweat it too much at this point.
- April 30, 2011 at 4:18 am #418238
Do you mean each month or over the life of the loan?
Each month they’ll send the principal, interest, taxes and insurance in a payment. That’s what they “send” to the bank, not what they “pay” the bank. The principal and interest goes to the bank. The taxes and insurance go into an escrow account and are paid out to the county or to the insurance company when they’re due. In the industry we call this PITI, principal, interest, taxes and insurance.
BTW, the mortgage payment doesn’t look right. If you take $ 190,000 and multiply it by 6.3%, divide it by 12 months, you get $ 997.50, which is for the interest on the loan for one month. Your $ 903 payment isn’t enough to cover the interest, much less any principal. Did the teacher say this was an interest only loan? That would put a whole new light on things, and this answer doesn’t work.
If you’re trying to figure out the total cost of the loan, principal and interest, over the whole term of the loan — the entire 30 years — then you multiply the principal and interest payments by 12 months, and that product by 30 years.
The closings costs are paid to the title company at closing, so that doesn’t seem to fit the phrase “send to the bank”, which is why I didn’t count them.
FYI, because the buyers didn’t make the downpayment 20% of the purchase price, there would be one more monthly charge for mortgage insurance. The amount varies not only based on the amount borrowed, but on the borrower’s credit. Sometimes it’s as much as the rest of the payment if there’s really bad credit. Now we call it PITIMI. Mortgage insurnace is frequently called private mortgage insurance or PMI. I don’t know why, and I’ve never worked for a lender in the last 15 years that called it that. When I was a real estate agent, that’s what we called it. Go figure.
Banks incur more risk when the borrower has less of his own money invested in the property. It’s easier to walk away from that $ 18000 investment than it is to walk away from $ 38000.
- April 30, 2011 at 4:18 am #418239
The $ 903.00 is the interest only. This would not pay the mortgage off. But you have to give the answer in 2 ways.
$ 903.00 x 360 = $ 325,080.00
$ 237.50 + $ 47.91 = $ 285.41 x 360 = $ 102,747.60 – assuming they don’t go up over the next 30 years.
To pay off the loan, for a 30 year fixed, the payment would be $ 1064.63 x 360 = $ 383,267.95 + $ 18,000.00 down & closing costs.
It sounds like he does not know what he is talking about, so answer both ways & don’t forget to vote me as best answers!
- April 30, 2011 at 4:18 am #418240
It depends on your loan. Most often the homeowner will have property taxes, and homeowners insurance included in their mortgage payment, in that case all of it would go to the bank, if it is not included, the would only send the principal and interest.
- April 30, 2011 at 4:18 am #418241
Well, the simple answer: everything that you pay per month as a “mortgage payment” goes to the bank.
Your property tax, insurance, etc do NOT go to the bank, but rather to the government, the insurance company, etc. Closing costs (other than government fees) go to the title insurance company or to the lawyer who helps you with the deal.
The question you’re answering here is how much the bank makes on the sale price of 190,000 … well, multiply the monthly payments by the term of the loan, subtract the home price from it. What remains is the interest charge – that’s what the bank makes. It’s usually between 2 to 4 times the price of the house, depending on the interest rate and the term of the loan – which is why people advise paying down the principal ASAP. 🙂
Good luck with your course!
- May 4, 2011 at 4:13 am #200610
…months do you have to short sale? Condo in California, loan with Indymac Bank. If I am delinquent for 3 months and disapproved for a loan modification, how much longer will I have to attempt a short sale?
- May 4, 2011 at 12:26 pm #258165
That is actually a question you need to pose to Indymac , as it is completely up to them as to how they wish to proceed. When you were denied a loan modification, did they offer the option of a short sale? Normally an investor will let you know if a short sale is an option upon denial of a loan mod. In this market, each bank/investor is in their own dire need and it really depends on how desperate their need to recoup this money. The longer they allow the process to drag out, the more costly it can become for them. Best advice is to contact the litigation department of IndyMac and ask them if a short sale is an option for you now that the modification has failed.
- May 6, 2011 at 11:32 pm #263402
Indy Mac would be the one doing the short sale after you either left or got forclosed on. The bigger question is why did your mod get turned down? If your behind on the mortgage a refi wouldn’t be an option and the mod is the best/only option for you if you want to keep your place … check out http://www.makinghomeaffordable.gov
- May 8, 2011 at 5:18 pm #268104
You can attempt a short sale at any time.
The problem is that the short sale has to close within a period of time allowed by the bank. In other words, if it takes 6 months to get an offer with a 3.5% down payment and a 90 day escrow, good luck getting the bank to accept it. However, if, next week, someone wants to pay cash and close right away, you stand a pretty good chance of making it happen.
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