does the amount you pay for mortage every month increases overtime?

Question

my parents just bought a home that they cant even afford (700.00 in san francisco),the mortage payments will be 10 thousand dollars every month for 30 years,which i think is totally crazy,i am sure they wont make it,and will lose the house,they dont even make 5 thousand a month,and they had to borrow money from every relative available to put down the down payment (100 thousand dollars),the house is gonna be many times more expensive than the actual price,does anyone know if the monthly payments can increase without notice? can anyone tell me if there is a way of backing out from this deal without losing the down payment they put on the house? please help! my parents are in deep ****

Answer 1

25 + years as a mortgage banker=

The only way they can "get out of it" at this point is if they have not already closed. A couple of things they can do if they haven't:

If there is a mortgage contingency they can get out of it by being declined by the lender. It's not hard to do, just tell them that they can't provide some of the documents being requested.

If there is a home inspeciont contingecy in the contract they can get out of it if anything is sub-standard on the house they are purchasing. You need to have the Realtors cooperation, but it can be done.

No, the payment can't just go up. The property taxes and homeowners insurance can and will, so they will end up paying more eventually.

Zip me an e-mail at [e-mail] if you need more help.

Jimmy

Answer 2

Your figures don't quite add up right.
There are a couple of different types of mortgages out there & a couple of different things that can make a mortgage payment change with time.
An Adjustable rate mortgage has an interest rate that changes with the time & economy.
A fixed rate mortgage carries the same interest rate despite changes in the economy.
Insurance & taxes are variables that are often included in mortgage payments, causing even a fixed rate mortgage change in terms of the monthly payment.
Have they closed on the home?
If so, there is no backing out...they can try to sell & hope to break even.
If not, then they would lose all of their good faith money should they decide to back out.

Please look at your parents choices & motivations and try not to make these mistakes when you venture out into the world. My parents made foolish choices like this & we lived a life a gypsies. When I was ready to buy a home & went to get pre-qualified they 'pre-qualified' me for a house two times the amount then I had chosen as the max for me. They said 'but, you can afford this much.' I laughed & said ' Hey now, you don't have to live with me, I do & I know how much I want to spend.' I bought a home much lower in price than I qualified for & am so grateful now that I have taken a 75% paycut to work at a place that I love.

Answer 3

First off, the payments on a 600,000 note at 6.5% for 30 years is about $3,800 a month. Assuming that the interest rate is fixed that won't vary. Taxes and insurance would add to that and can vary over time but $10k a month sounds like a stretch.

No, there's no way to "back out" of a closed deal. Nor should there be. And if they only make $5k a month it's not likely that they would ever have been approved for the loan. Methinks that you don't have a clear picture of your parent's finances.

Answer 4

See, you should have discussed this BEFORE moving in. And if you had waited until you were engaged and soon-to-be married before moving in, it would be even less of a problem. He's right that wherever you go you'll be paying rent... but renting a room is much cheaper than renting an entire apartment. You should NOT be paying half his mortgage without an ownership claim to the house. I'd say $300 max... especially since you don't even have your own room. Nor should the bills be 50/50, because HE is earning equity on that house, while you are not. It should be more like 70/30. The fact that you have helped with repairs, bills, and groceries is extra. When I was renting out rooms in my house, my tenants bought their own groceries, and their rent went partly to electric, gas, and water. It wasn't separate. If your boyfriend can't afford the house by himself, he never should have purchased it. Talk to him again, and tell him again that you're spending to much money on a house you have no ownership claim to. $2500 for helping with a remodel was above and beyond... you really shouldn't have done that. So is paying for the utilities and groceries. You're giving him too much of your money (and time, since you also clean everything). It might even be cheaper for you to live on your own. You should consider it, because he's taking advantage. Note for the future: Don't act like a wife when you're not a wife.

Answer 5

They should pay a lawyer $100 to look at whatever they signed. If they haven't closed, they can get out - they just might lose a deposit.

Mortgages can go up if they are adjustable rate mortgages. That said, I don't see how you can spend $10,000 a month for a $700,000 house. The only way I can possibly see it is if the mortgage is about $5000/month (possible) and the taxes are about $5000/month (theoretically possible in S.F., I guess).

I don't see any bank qualifying them for that kind of loan, though. How do you buy a $700k house on a $30k/yr income? It ain't gonna happen.

Answer 6

1) if you already bought a house you cant back out now. ....the deed is signed. If they only have a purcahse and sale agreement they can-- but they may lose the earnest money/downpayment.

2) House payments do not go up over time as long as its a fixed rate mortgae. However, the TAXES do go up-- and if they are paying this in their monthly payment, it may be adjusted once a year.

They need to sell ASAP and get back what they can out of the deal.

Answer 7

if they have a fixed interest rate, the mortgage will not increase, it will remain the same for 30 years. but if they have other arrangement then it may go up or down.

if their interest is fixed but the real estate taxes are escrowed into the mortgage payments, then the mortgage will likely go up every year since taxes tend to increase.

bottome line, if your parents only make $5k a month, then I'm not sure how they can afford the mortgage even if the mortgage doesn't increase.

good luck.

Answer 8

1. Your parent's business is none of yours.
2. No bank would lend your parents the money for a mortgage they could not afford.
3. Mortgage payment on a 700,000 house for 30 years should never be $10,000 per month. The would mean they are paying 3.6 million dollars for their 700,000 house. Interest rates on mortgages are in the 6% range.
4. Mortgage interest rates on a fixed interest loan never go up. However, property taxes, school taxes, insurance, etc... go up almost every year.
5. Mortgage interest rates on a variable interest loan can increase every year up to the cap stated in their contract.

Answer 9

The payment stays the same, but the amount applied to the interest and then the principal changes. The majority of the first few years of payments go to the interest only and then gradually the payments are applied to the principal. Tell your parents to sell the house. Even if they sell it at a loss, they can protect their future credit.

Answer 10

if they have an adjustable rate mortgage it can go up. not to mention property taxes go up all the time. they should try to rent out the house for awhile get the amount they owe on it lower and then refinance so the payements will be lower. you should never buy a house you cant afford. it will destroy your credit. and if they happen to go into foreclosure they will get their home taken away from them and any money they put into it will be lost. i suggest they sell or if they really want to keep the house do the renting option.