rate, highway robbery? In addition, how does one perform the calculation to learn what the total amount of the loan will cost? My math skills suggest that it is over $100,000 dollars. Did I screw-up somewhere?
2006-11-22 12:16:33 · 4 answers · asked by Westbound 4 in Business & Finance ➔ Renting & Real Estate
you can have a negative amortization loan where unpaid interest is added to principal
2006-11-22 12:46:21 · answer #1 · answered by Anonymous · 0⤊ 0⤋
That sounds like a Neg Am Loan, (MTA ARM). That $1,697 is a payment the bank will take so you wont be late on your mortgage. ARM loans allow you to have a payment option every month. Every time one pays that 1697, they add to the amount of principal already owed on the house. The amount added is the difference between the Interest only payment and the 1697 in this case. For example, on a 30yr conventional loan on a 510K house. The principal and interest would be 3,391 ( at 7%)...the interest only payment would be $2,975. Thus every time you pay that low payment, you add ( 2,975-1,697 = 1278) 1278 to the 510K principal every month. Tricky loan, a lot of people go into these loans thinking that low payment pays principal. One has to be carefull becuase the low payment is always at an attractive rate, around 1%. and many loan officers dont explain that clearly enough.
2006-11-22 13:51:01 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Yeah its probably an intrest only loan where you pay that amount for 5-10 years then it ballons to like 3200 pluss an extra 10 percent so after a while youll start paying like 3500 my aunt has been buying homes with this program and became dangerously in trouble when she tried to sell be for the price ballon luckily she sold 9 days before the mortgage balloned or she would have lost tons of money.
2006-11-22 13:52:38 · answer #3 · answered by Anonymous · 0⤊ 0⤋
If it's too good to be true that's cause it probably is. remember this little saying.
2006-11-22 14:02:52 · answer #4 · answered by Anonymous · 0⤊ 0⤋