I was “tricked” into this mortgage 4 years ago, and Im lucky I have a 10 year interest-only option, but I want to refinance now and I cant because I have no equity. Basically I am renting my house… I want to know also if I can sue my mortgage company for hiding this interest-only option at my closing… Do I have a case at all? Yes, I know I am party responsible for not seeing the fine print, but I was 23 and eager to own my own home, now my home owns me!
Wow ~ I asked for help ~ Not to be told I am a moron, but thanks to all for answering…
I know that the market is really bad right now and I’ve heard that bankers aren’t really giving out loans to anyone – no matter what their credit score or down payment is. Do we have a chance at getting a home loan? Here are our details:
-Married but young (22 years old) with no children
-Small amount of debt (one low interest loan for eduation for $20,000 with low monthly payments) and roughly $2000 in credit card debt
-Secure job making $52,000 a year
-Pretty good credit but not much credit since we’re young
We are looking at buying a small $75,000 home and are planning on putting 3%-5% down.
I have regularly paid the amount on my consolidated, subsidized student loan (sallie mae). For years, i’ve subscribed to the conventional wisdom of ‘why on earth would you pay off such a cheap loan?” Invest instead, you’ll earn more and it’ll wash out the low interest rate you’re paying (2% subsidized loan).
Here’s are the data, what I can’t understand is the amortization (right word?) of the loan.
Sallie Mae
Original consolidated loan amount: $11,291.72
Outstanding Principal Balance: $5,656.82 (Can pay off the loan with check today for $5,664.26)
Monthly Payment: $83.24 for 83 months
With a Final Payment on 2/28/2018 $84.21, I’d be paying a total of $6,993.13.
I figure we’re only talking about a few hundred bucks whether I pay it off now or keep paying the schedule and invest the cash…but my current ten year run in the market hasn’t inspired a lot of confidence in a consistent annual return. When CD/MMR rates were 4-5%, I understood the logic but now when you’re scrounging for 1.5% then doesn’t it make sense to pay it off?
For background, I have a stable income, no other debt, more than 6 months rainy day (at those paltry rates we’re getting right now)no real interest in putting a down payment on a house (CA real estate is absurd and the $6k we’re talking about is a drop in the bucket anyway) and max out my ROTH and employer match in 401k.
Anyway, real question is, how does a current outstanding balance of $5656.82 at 2% fixed interest rate turn into $6993.13? the loan calculators i have out there seem to say total interest paid should only be about half that over the course of the next 7 years. Can anyone explain this to me?
Bert, Thank you for your response. You are correct, the information I gave doesn’t add up and that’s for a couple reasons. 1) original payment schedule on consolidation had my monthly payment at 79.54, 2) I adjusted my payment schedule in April 2006 increasing my monthly payment to 83.24, and 3) I have made some extra payments of 829.54 in oct 2005 (and small payments adding up to 241.18 during 2009/2010). Apologize my confusion if it should be obvious, but my main question is that if i pay my scheduled 83.24 for the remainder of the loan, am I really paying $1300 more in interest payments over the next 84 months
My daughter bought a house with her fiance in 05′ (in California) they have a first and a second. The second is fixed but the first is a variable and the interest rate is doubling. They put no money down and the first was an interest only loan, therefore there is no equity and the house has declined significantly in value due to the market. Also, she has $15,000 in credit card debt. I am thinking they just might be better off if she files for bankruptcy at this point (yes she has learned her lesson) and perhaps in the future they can purchase another home maybe even sooner since he has pretty good credit, housing prices are a lot lower and he could qualify for a loan.
I am cross-posting this into politics from business:
This $25 billion for Detroit will be secured by capital assets – will bear fair market rate interest, and will save $150 billion per year in lost income if the big3 close.
Why is the word “bailout” being thrown around so much – it’s not like they can go to a bank to borrow money – there are no banks, they have all shut down all lending.
Is it because the PRESS said “bailout” and everybody are lemmings and can’t decide a word to use without the press?
What would be a descriptive word, other than “bailout” – (be serious)
But the big3 work on credit – the loans are secured – same a a mortgage.
Credit system is broken in a credit economy – isn’t this a rescue, not a bailout?
I will point out that “right to work” automakers, being foreign companies, are all able to get loans. Only the US banks have shut down completely – isn’t this unfair competition?
I mean “probably able to get loans” – it’s an assumption on my part – but it makes sense.
our mortgage. We have two interest only loans and no equity in the home totaling $3500 per month. We have an additional $20,000 in savings for emergency funds. Any suggestions? Thanks
My home was built by Habitat for Humanity and I have a zero percent interest loan we are looking to do an addition but we are not sure how Home Equity loans work. Will it matter that my house has no interest on the loan? I asked the bank and they weren’t much help other than we would have to fill the application out first. Just Curious Tnks 
To add some details to the response about taking advantage of the system… I was 21 when my daughter and I built and moved into our home. I refused to pay the expensive rent and lived in the apartment attached to my parents home when I heard of habitat and when they came out and reviewed that yes it would be worth my while to get into my own home since I had good credit and a good job at the time in the claims field I was approved. Habitat is completly different than like Hud Housing. Three years ago I got married to a man who puts his 40 hrs in a week as well and we had a son and are adding a bedroom. I am not taking advantage nor is anyone paying my bills and I am not worried about losing my home I was just asking this to be a little more informed before we start looking at loans Tnks