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Refinance Mortgage Mechanism Coming Due

Re-financing has proven to be any lifesaver for various causes and for many people. If youve a balloon home loan coming due, re-financing may also be your solution.

What Are Balloon Mortgage loans?
Balloon mortgages are usually essentially short-term loans. Once you acquire a balloon mortgage, your monthly payment and interest rates are based on thirty-year loan amount schedules. That seems good, doesnt it? But keep in mind that these are short-term lending options they usually cover 5 to 7 years and on the final payment date, youll be required to make a balloon repayment. This payment covers the entire remaining balance of your loan.

If you cant afford to do that then youll have to refinance your loan or lose your property.

The proper Time to Acquire a Balloon Mortgage
There are 3 ideal situations that will merit a go up mortgage for your home.

Lower Monthly Payments
Right now, low monthly payments are the only way you can think of in order to afford a home for you and your loved ones. If so, theres probably no other type of mortgage that can give you lower prices than balloon mortgage loans. But of course, the final mechanism payment is another tale.

Selling Your Property
Youre pleased with your current home nevertheless, you also know that in five to seven years, youll end up being moving out for one cause or another and you aspire to have sold your home by then. Having such plans will make a balloon mortgage is good. With a balloon mortgage loan, you dont have to worry at the moment about high interest rates and also high monthly payments. And when its due date comes up, you wont have to worry possibly because you can then utilize the proceeds from selling the property to settle your loan.

Expecting Higher Income
Ultimately, a balloon mortgage is nothing to worry about if you expect to receive substantial income or revenue in the near future, one thats with any luck , more than adequate to settle your balloon transaction.

Factors to Consider When You Refinance Your Balloon Mortgage
Now, planning is all well and good but occasionally nothing, no matter what you need to do, will go your way. Youve carried out all you could however in the end, you realize that a person cant afford to pay off any balloon payment. Any time that happens, you have only two options: replacing or losing your property. If you choose the former, below are some important factors to consider.

Charges
Definitely, you should select a refinance loan that offers you should rates compared to the existing loans. To qualify for such lending options, however, youll need to persuade lenders that youre a good credit risk.

Type
What type of mortgage would you like to remove this time? Dont repeat previous mistakes. If a mechanism mortgage didnt work to begin with, it might not work the very next time either. Take out the kind of loan youre most comfortable with. Youve got a lot of options to choose from therefore take your time weighing the pros and cons of each alternative.

Charges
Re-financing would occasionally come with hidden fees or charges so ensure youre aware of exactly what youll need to pay when you refinance your balloon mortgage.

Supply
Last but not minimal, get a refinance loan simply from trusted suppliers!

Comments: 56

  1. Karri May 29, 2013 at 1:16 pm Reply

    who could not afford to repay them?
    Underwriting such a mortgage would be a direct violation of the regulations that GOP/Teabaggers are constantly citing to justify their placing the blame for the global economic collapse on poor folks. That, and 95% of all subprime mortgages were issued by lenders that were NOT regulated, in any way, shape, or form, by the CRA.
    So, is there actually proof, or are GOP/Teabaggers talking out of their @sses, as usual, when they blame regulation and the poor?

  2. Dee August 29, 2013 at 4:52 am Reply

    We are in foreclosure and our bank has sold the second loan (balloon mortgage) to quite a few other banks. Needless to say when we call HL on the loan they have no idea who now owns our second loan. We are trying to do a short sale, can we say we no longer owe the money if they lost the loan? Can we say “Prove it” will that work?

  3. Willena September 19, 2013 at 4:00 pm Reply

    What companies offer balloon mortgages and if you know what is the average rate? Thanks~

  4. Virgina September 27, 2013 at 5:15 pm Reply

    I dont want to get scammed into taking a mortgage I dont need. Can a mortgage expert enlighten me on mortgages. i would also like to hear the laymans views as well. How many types are out there; Pros and cons. I just heard of an inerest only but the only sense I can make from it is that there is no principal on the loan. Does that mean I would have to take another mortgage on the principal. What a balloon mortgage? Sounds like something that would blow up if I’m not careful. Once I decide on the mortgage that would best suite me do I then look for a bank. I dont want 5 different bank looking into my credit report. Can I run my own and hand each one a copy? What are the pros and con of using a bank instead of a mortgage boker and vice versa.

  5. Keven September 28, 2013 at 2:31 am Reply

    Lol no cheating, I’m serious. You can look at my school transcript if you want. I’m in Geometry and signed up for Algebra 2. Anyways my friend is having a hard time on this, can any of you take a look at it and help?

    Kayla is financing $168,125 to purchase a house. She obtained a 25/8 balloon mortgage at 3.85%. What will her balloon payment be?

    $130,626.56

    $131,045.66

    $135,655.10

    $140,657.11

  6. Hubert October 10, 2013 at 4:11 pm Reply

    Not only did he lead us into the worst depression since WWII including this one, but he also ran through the Community Reinvestment Act. That led this country down the path that lead to the Bush Housing Bubble Burst.
    Don’t be so quick to blame banks. If borrowers just paid back the loans then there would have been no housing crisis. Despite claims no one’s interest rates triled unless they had some type of irresponsible balloon style mortgage.

  7. Arletha December 17, 2013 at 8:17 am Reply

    im in california – how will this affect the title, the mortgage, and the legal aspects? thanks!
    thanks for your answers!
    If none of that was done, would that mean it probably was not recorded?
    Is there a law that says it must be paid in full or refinanced?

  8. Lynnette December 23, 2013 at 9:51 am Reply

    I am thinking about taking over the mortgage for this really nice condo. the rent is like two hundred dollars cheaper than the apt i am renting now. but idk? Im 22 and in nursing school right now. will it be a good idea?

  9. Berneice January 14, 2014 at 6:05 am Reply

    The house I would like to buy would only cost me about 25,000 – 30,000 dollars. If i make a down payment of about $5,000, is it realistically possible to get a mortgage for 20,000? I have excellent credit score, but I’ve heard from people that banks would be reluctant about agreeing to a mortgage under 35K. Is this true?

  10. Sean February 2, 2014 at 6:47 am Reply

    are you allowed to pay extra principal each month?

  11. Hisako February 2, 2014 at 9:58 am Reply

    Ok i’m so lost, any idea how to do these?

    Maya obtains a $423,000 30/10 balloon mortgage with a rate of 5.65%. What will her monthly payments be? (1 point)
    $3712.13
    $2945.72
    $2715.51
    $2441.71
    3. Murphy obtains a 15/5 balloon mortgage to finance $113,500 at 4.95%. How much principal and interest will he have already paid when his balloon payment is due? (1 point)
    $85,433.10
    $70,863.13
    $52,781.40
    $53,676.00
    4. Julianne and Benjamin are financing $113,500 to purchase a house. They obtained a 15/5 balloon mortgage at 4.95%. What will their balloon payment be? (1 point)
    $138,214.50
    $64,924.03
    $84,887.22
    $85,433.10
    5. Sarah finances $549,000 with a 30/6 balloon mortgage at 5.35%. How much will she pay for principal and interest over the life of the loan? (1 point)
    $715,175.04
    $713,297.14
    $717,393.12
    $719,607.40
    6. Andrew and Aimee have a 20/6 balloon mortgage for $341,100 with a rate of 5.15%. How much will they pay in interest over the life of the loan? (1 point)
    $109,200.11
    $95,487.13
    $88,507.79
    $96,656.46

    trying to study and these hit and i was just lost. Any help would be much appreciated so thank you ahead of time.

  12. Paris February 21, 2014 at 11:53 pm Reply

    A balloon-payment mortgage requires interest payments for a 10- to 20-year period, at the end of which the borrower must pay the full amount of the principal.
    true or false

  13. Reita February 22, 2014 at 2:19 am Reply

    You seniors are a smart group and someone has had experience.

    My wife and I have a balloon due on our mortgage in Aug of this year. We owe 85k and the house has gone down in value from 125k last year to about 99k currently. We have a no principal-interest only loan. We want to refinance to a fixed 30 year loan.

    We called the mortgage company holding the note and we were instructed not to do anything, because the loan would automatically extend another year with an adjustment in payment that “could go down” in the amount we pay. I don’t like that.

    What should we do?

  14. Elfreda February 22, 2014 at 3:37 am Reply

    I’m looking for a statistic. Of the mortgages which had teaser interest rates that were scheduled to “balloon” in 2 years, what percent have defaulted?

  15. Soledad February 25, 2014 at 11:20 am Reply

    will have a balloon payment due for the amount of $177,843. If he decides to make the balloon payment, what will be the total financed price he paid for his home?

    A) $263,092
    B) $254,934
    C) $264,615
    D) $234,730

  16. Rey February 25, 2014 at 11:20 am Reply

    I purchased my condo in 2004 & took out a seven year Fannie Mae backed balloon mortgage at that time. I wasn’t planning on staying there more than 3-4 years so I figured there was no harm in doing that.

    I’ve been trying to sell for some time but at the time I tried to sell was when the real-estate market fell through so no one was buying. Now my condo value has shrunk. I purchased at $130,000 in 2004. In 2005 it appraised for $166,000. I currently owe $120,000 . . . The condo is worth around $60,000 to $75,000.

    I currently do not live in this condo, I live with my significant other (not married) in their house. I had a tenant in the place for a few months but they left as they couldn’t afford the rent (which is a good amount less than my monthly payments anyway)

    Illinois is not an anti-deficiency state so, as I understand it, if the balloon mortgage resets without me either selling the place or finding a bank that’s willing to finance a home that’s worth half of the loan then the current mortgage holder can repossess the home (which probably isn’t a bad thing at this point) and then come after me for the difference in what they would be able to dump the condo for.

    I’m already in talks with real-estate attorneys on how to best deal with this . . . Anyone else have any experience in this and suggestions?

  17. Chae March 18, 2014 at 4:42 am Reply

    I having some problems with this if you could please help me out thanks!

    A $900,000 balloon mortgage has terms of 25/7 with a 4% interest rate. What is the monthly payment rounded to the nearest dollar?

  18. Hoyt March 18, 2014 at 10:46 am Reply

    I have a few already

    Adjustable Rate
    Fixed Rate
    FHA
    Equity
    Subprime

    Is there any other home loan types that I am missing?
    Okay, Please Don’t Post links to your website. I’m not looking to apply for a home loan. I just want to know what type of home loans exist.

  19. Dominica March 21, 2014 at 7:47 pm Reply

    Hi All,

    I wanted to ask whether the following mortgage commitment I received from a small bank is reasonable or completely wrong(?)

    The mortgage commitment includes the following statement: “the loan balance upon maturity (5 years), with ALL INTEREST, charges and accessories, shall become due and payable on that date…. the mortgage will become due and payable in 60 months at which time the borrower, if all payments are made on the due date and any prepayment privilege is not used, will owe $155,000″ (I rounded).

    However, the loan amount (principal) is only $120,000! My question is is this normal that after 5 years the bank has calculated I will owe $155,000??

    I understand how they calculated it – they added the present value of all future interest payments (30 years) to the amount I will owe. However, is this standard meaning most banks do it this way or is it completely wrong to the extent I should not take their loan?

    What happens after 5 years if I want to continue with a different bank??

    Lastly, in another section in the contract they mentioned” the mortgage is not renewable (after 5 years) on the same terms as described above (referring to interest and amortization). Therefore, on one hand if I take their mortgage it will never make sense to switch to a different bank after the 5 years term due to a HUGE penalty – will owe $155K where initial loan is only $120K. On the other hand if I stay with them they can now (after 5 years) charge any interest they want as they mentioned above.

    I guess the bottom line is if this is a common/standard practice and most banks do it this way I will take the mortgage however if this is completely wrong/unreasonable I will not.
    Is it even LEGAL for a bank to charge future interest (25 years interest) at the end of a term (5 years)? Don’t they have to follow certain rules/regulations too?

    I would appreciate any advice on the topic.

    THANKS & REGARDS,
    Neil
    Thanks everyone. I will try to answer some of your questions.
    it’s a variable rate interest. not just interest is paid. the 155K just does not make sense to me!!! i have excellent credit score with no income. but it does not matter i was approved. just doesn’t make sense after 5 years if i want to take my mortgage to another bank, i have to pay such a HUGE penalty – 35,000 more than original loan.
    the problem is they are the only bankl who approved me!

  20. Enda March 25, 2014 at 4:23 am Reply

    I have a balloon mortgage and it recently came due. I was unaware that I even had this. I lost my home 5 years ago to a fire and was so distraught that when I purchased a new modular home to place on my property the bank must have slipped this through. I dont think if I was in my right mind I would have gone through with this. Now I have to worry about it every 5 years. My mom thinks that the government are helping people through Fannie Mae or Freddie mac. Does anyone have any ideas? Help!

  21. Demetrius March 28, 2014 at 8:00 am Reply

    In maths, i really want an A and i have to investigate a different type of loan then a standard secured car loan. I chose to use a Chattel Mortgage alternative. So i need to know how to works, so i can mathematically create an excel sheet for a loan schedule.

    With my previous investigation i had these values for a secured car loan:
    Months
    Interest
    amount owed
    repayments
    and Balance

    Thanks 🙂

  22. Wilburn March 29, 2014 at 8:37 am Reply

    Suzanne finances $315,000 with a 15/4 balloon mortgage at 3.75%. How much will she pay for principal and interest over the life of the loan?

    $358,189.67

    $357,416.36

    $355,775.49

    $356,638.32

  23. Tommye March 29, 2014 at 2:22 pm Reply

    Someone told me that 2nd mortgages with balloon payments are illegal. Does anyone know?

  24. Ariel March 29, 2014 at 7:15 pm Reply

    I entered the following into an online mortgage balloon calculator:

    Loan amount $100,000.00
    Interest rate 6.000%
    Term 10 years
    Amortization period 30 years

    My question is:

    After 119 monthly payments of $599.55 why does the balloon payment come out to $84,285.33 ? If everything is due on a 30 year amortization schedule, shouldn’t the amount owed be the remaining 241 payments multiplied by $599.55 ($144,491.55) ? If not, then where does the $84,285.33 come from?

  25. Belia March 29, 2014 at 9:08 pm Reply

    I’m not just talking about explaining it, but can someone show me an example of a balloon mortgage product. IE a link to a companies website with that particular type of mortgage product as an example? I can’t seem to distinguish what a balloon mortgage is?

  26. Carlos March 30, 2014 at 2:19 am Reply

    Explain the use of a balloon- payment mortgage. Why might a financial institution prefer to offer this type of mortgage?

  27. Gayle March 30, 2014 at 2:55 am Reply

    My wife and I have a balloon due on our mortgage in Aug of this year. We owe 85k and the house has gone down in value from 125k last year to about 99k currently. We have a no principal-interest only loan. We want to refinance to a fixed 30 year loan.

    We called the mortgage company holding the note and we were instructed not to do anything, because the loan would automatically extend another year with an adjustment in payment that “could go down” in the amount we pay. I don’t like that.

    What should we do?
    We are not behind in payments and have never been late with a payment. Top rated credit score. The balloon is due this August. The current mortgage company will extend the payments after adjusting (up or down) the amount due for 1 year. The payment now is interest only with no money going on the principal, (unless we add extra). It does have an escrow account for the house insurance and property taxes. I guess we will continue to make payments and wait to see if we can get a regular 30 year fixed later. Thanks to all whom posted suggestions.

  28. Mike March 30, 2014 at 10:07 am Reply

    I read the wikipedia page but I’m still not sure I understand. How long would the mortgage be for? I’m assuming there’s a big payment due at the end, but what is the point? What happens if you can’t pay it? Are they good? Bad?

  29. Tiffaney March 30, 2014 at 8:19 pm Reply

    My interest rate is 8.975% my payment is 377.10 The problem is my balance barely ever changes.I finally started to keep a close eye on this and noticed that the amount of interest varied greatly month to month some months if I was lucky as much as 128.00 of the payment I made was going to the principal while the rest went to interest other months the entire payment amount all went to interest even if i paid extra and told them to put it on the principal they still put it to interest. Keep in mind all of these payment were made on time so its not like I was past due. I recently made a 500.00 payment requesting it all go to principal instead it went on interest I had to go right down to the branch office to get it straighten out and was told that the cashiers didn’t know how to split payments if you wanted to add extra to your principal and it was going to be noted on my account from them on to always do mine like this guess what they did it again. I’m just wondering is this normal practice do interest payment amounts jump up and down like this every month or does someone else out there think there is something funny going on here? I was told by the old loan officer there to ask for an investigation into it. Please help.

  30. Morgan March 30, 2014 at 9:03 pm Reply

    I have a simple interest 7.0% 20 year mortgage on $102,599 paid monthly in 12 paymens a year of $794.15. I just want to verify if there will ba any amount left over at the end of 20 years if all payments are made. Taken out in 1998, currently owed is $58,837.61

  31. Serina March 31, 2014 at 1:51 am Reply

    Is this what people refer to as a “balloon mortgage”?

  32. Brent March 31, 2014 at 1:03 pm Reply

    If not, what is the difference?

  33. Camilla March 31, 2014 at 4:01 pm Reply

    I was just watching this video about a man who may have to sell his home which he built inside a cave because he had a “balloon note” coming up in 60 days. I may have misheard him, but I think that’s what he called it.

    Sorry if this is the sorta thing I should already know. I’m 17 and don’t know a lot about financing, but I’m really curious. Could someone please explain? Thx. : )
    All the answers were helpful. Thx.

  34. Guadalupe April 1, 2014 at 3:58 am Reply

    Is a balloon mortgage a better option for the mortgage company and the consumer in these trying times, or is there other loans that can help consumers to restructure their debt at this time?

  35. Antwan April 1, 2014 at 9:20 am Reply

    If you’re applying for a mortgage, and you have a balloon payment due on another loan in five years, will that balloon payment affect your mortgage qualification?

    In other words, does the mortgage underwriter care what’s supposed to happen in five years? Or only in the next few years? To determine your debt to income ratio, etc.

  36. Kylee April 1, 2014 at 9:53 am Reply

    I know answer – lose home – but I’m looking for other advice!
    New home we built in 07 – have $100k – can’t refinance anywhere – bank only gave us a 1 year balloon – which is now due in a few days. note, this if for entire mortgage. They may extend, but we don’t have paperwork yet or maybe they just want home!
    We are not late – just owe property taxes yet.
    I guess we most likely have no grounds to sue since we signed paperwork, right?
    Should I consider a loan modification attorney since they seem unwilling to work with us and just want all their money?
    Scratch the grounds for suing – I know that what we have is all hear say. We’ve told them we can’t afford it and bottom line is we should of gave them house when they refused to give us more $ to finish construction a year ago. They told us to beg, steal and borrow to get Occupancy and they’ll turn around and give us HELOC. They never did and we’re stuck. Our fault for believing crooks. What do you do? Let them have what they wanted all along – the home.
    They want the loan off their books and paid for in full. That is what they want. We can’t find a way to make it happen, so we lose home. I guess that is the bottom line. Just looking for an ounce of hope. 🙂

  37. Dell April 1, 2014 at 11:19 am Reply

    please give me an easy meaning that i could understand easily what balloon mortgage means?

  38. Jannette April 1, 2014 at 1:29 pm Reply

    Please help!!!!

  39. Bryan April 1, 2014 at 2:08 pm Reply

    We are trying to use a local credit union and want a 15 year loan. This amortized balloon is what they offer. Just wondering of this is a good idea or should we shop around more?

  40. Melaine April 1, 2014 at 9:14 pm Reply

    I have 260K 1st mortgage at 5.25% and 49K 2nd mortgage at 7.5%.
    My 2nd mortgage is a balloon loan due next April.
    The home market value is 265K.
    Do I need to payoff my balloon payment?
    Is it worth paying of the balloon payment when we have negative equity?
    Is there any way to avoid this balloon payment?
    I have contacted the bank. They said I need to contact them 2 months before expiration ie February. I need to show financial hardship to get 2nd mortgage modified.

  41. Lekisha April 1, 2014 at 9:40 pm Reply

    I live in California and bought my home 2.5 years ago for $500,000. The terms were $400,000 at 6.75% interest only, set to adjust at 5 years. The second was $100,000 at 9.25 interest only and 15 year balloon payment. Total payment is $3,072. The home is worth approximately $350,000 right now. I have made every payment thus far and have a great credit score of 790. I have asked for help from my lenders since times are getting tough and my wife received a notice of a possible layoff. So, I did the responsible thing and told my lenders that we need help and would like to adjust the rates and terms into more affordable and long term fixed rates that would allow us to stay in the home for a long time. They wanted proof of income and prior tax statements, so we provided it to both of them. One said they received it the second said they didn’t receive it. So, the first said “you clear too much after all your bills are said and paid for” we can not help you. Second never responded. Talked to them by phone and said they couldn’t do anything unless the first made an adjustment. That was 6 months ago. Clearly times are not getting easier and I have recontacted them several times over the phone since then. I was getting paid overtime and no longer make any overtime money. Now they say send in the documents again, so I did. The numbers I presented to them showed I made $1 less than the amount that was going out to pay for all expeses. This time the response was “financialy unable to afford monthy payments.” (no shit, thats why I’m contacting you)
    This whole mortgage thing is a mess. There is a foreclosed property on my street which has sit vacant for 8 months now. They are unwilling to work with me (clearly), so why continue to make payments to them. I can’t refinance (“under water”) and by the time my rate adjust I will still be “under water.” I can stay in this home for 3 months save money and then rent somewhere else at a lower rate. Save my money for the next 2-3 years then buy again at a much more affordable rate. Tell me why this choice isn’t smarter than continuing to pay my mortgage only to end up losing the house once the rates adjust. They have already received $100,000 at this point why give them $100,000 more?

  42. Keshia April 2, 2014 at 1:10 am Reply

    I had a hard time getting a mortgage because my better half’s credit was not so good so they had to base everything on me. The only type of loan we good get was a loan they called a balloon mortgage. It is fixed for 5 years at 7.25 and we were told we would be able to refinance after a couple of years. What happens if we don’t refinance. Will my monthly payment go alot higher.

  43. Raven April 2, 2014 at 2:35 am Reply

    I just recieved a pre application disclosure and fee agreement. It says designated lenders and list 3 then it says private lenders and it says, a balloon mortgage placed with a private lender need not have a term of at least three years. Does this mean they want to do a balloon loan. I wanted a fixed rate loan. Im just worried about signing it.

  44. Lorriane April 2, 2014 at 8:58 am Reply

    I owe about $85k on a 6.5% fixed with 26 years to go. I requested a loan modification (with the new Obama plan) and the call I got yesterday from the “negotiator” was that they will lower my interest rate to 3% which lowered my payments almost $300 AND there would be a 20 year balloon. I asked how long I’d make the new lower payments and she said “this is not like a refi, your existing mortgage has 314 payments left and you will pay the new payment for that term.” When I asked what the 20-year balloon was she seemed confused and said “oh that means you will have like $52K left to pay in one lump sum. But you can sell, or refinance at that time.” There is also a $500 fee they are charging me (I don’t have to pay it…my mortgage co is rolling it into this). I am lost! she said the paper work will be here by wednesday next week. But I am trying to search for a 20-year balloon to see what this is…and I’ve got NOTHING! Anyone have any clue???
    Regarding 3% reate offered…it is a fixed rate.

    So she must have been mistaken about paying the new payment for 314 more payments. If I am understanding you all correctly, a 20 year balloon is 241 payments with the last payment being one huge lump sum. But I will hopefully move out way before then. I already have almost $50K in equity right now. It’s just that my income plumented. Can you alter your answers if necessary since I forgot to include this info….thanks so much for the quick replies! I have been pounding my head over this.

  45. Stacee April 2, 2014 at 10:15 am Reply

    douglas hernberg,advantage florida mortgage would like to know what are the most common expiration terms for balloon mortgages?

  46. Constance April 3, 2014 at 3:47 am Reply

    dogulas hernberg,advantage florida mortgage would like to know what are the most common expiration terms for balloon mortgges?

  47. Jacque April 3, 2014 at 10:16 am Reply

    I have a 15/30 balloon mortgage at a rate of 9.65%. Will this
    stay 9.65% for the life of the loan?

  48. Stewart April 4, 2014 at 12:35 pm Reply

    Whats the advantage of using a ballon mortgage?

  49. Harris April 4, 2014 at 1:44 pm Reply

    Hi All,

    I wanted to ask whether the following mortgage commitment I received from a small bank is reasonable or completely wrong(?)

    The mortgage commitment includes the following statement: “the loan balance upon maturity (5 years), with ALL INTEREST, charges and accessories, shall become due and payable on that date…. the mortgage will become due and payable in 60 months at which time the borrower, if all payments are made on the due date and any prepayment privilege is not used, will owe $155,000″ (I rounded).

    However, the loan amount (principal) is only $120,000! My question is is this normal that after 5 years the bank has calculated I will owe $155,000??

    I understand how they calculated it – they added the present value of all future interest payments (30 years) to the amount I will owe. However, is this standard meaning most banks do it this way or is it completely wrong to the extent I should not take their loan?

    What happens after 5 years if I want to continue with a different bank??

    Lastly, in another section in the contract they mentioned” the mortgage is not renewable (after 5 years) on the same terms as described above (referring to interest and amortization). Therefore, on one hand if I take their mortgage it will never make sense to switch to a different bank after the 5 years term due to a HUGE penalty – will owe $155K where initial loan is only $120K. On the other hand if I stay with them they can now (after 5 years) charge any interest they want as they mentioned above.

    I guess the bottom line is if this is a common/standard practice and most banks do it this way I will take the mortgage however if this is completely wrong/unreasonable I will not.
    Is it even LEGAL for a bank to charge future interest (25 years interest) at the end of a term (5 years)? Don’t they have to follow certain rules/regulations too?

    I would appreciate any advice on the topic.

    THANKS & REGARDS,
    Neil
    PS. it’s a variable rate mortgage and the monthly payments include interest and principal

  50. Tyree April 5, 2014 at 4:48 am Reply

    I do not get it. I do not get what it is and what it does and what it’s for. How in the world does it affect a consumer?

  51. Lance April 5, 2014 at 4:05 pm Reply

    Had a house which turned into a rental (tried to sell for a year) when we bought bigger house to accommodate growing family. Due to income, this funky loan was only ‘bridge loan’ option. Tried to refi into fixed, but recent sales in home’s area all foreclosures -put our appraisal very low and now appear upside-down on mortgage by $20K. Cannot afford to bring difference to table. Spoke with lender about other options and were advised to fax letter outlining situation, asking for renegotiation. We’d like to just extend the current terms for 5 more years. Loan comes due end of Feb. Lender will not give us any idea of when we’ll know – telling us this is all new to them, too, with so many people stuck in similar situation. Our credit is in the 780s and we pay everything on time & in full. Currently have committed paying tenant in home.
    Short-sale not an option.

    If you’ve had success (or not) in renegotiating with your lender, please share your story and advise.

    No lectures, pls. Thanks!

  52. Karly June 5, 2014 at 2:56 am Reply

    My husband and I are in the process of buying our first home, we also have a car that we would like to trade in for something newer. Is it illegal to bump our mortgage loan up by $10,000- $15,000 and use it to buy a pre-owned car? The car would be payed off at the dealership with the loan, so it would be ‘payed off’ immediently, as in, we will only have a few extra dollars a month added to our mortgage. I see it as consolidating car loan and mortgage- is this a good idea?
    Uhhh- I’m not asking about what kind of a loan I should get.

  53. Tami June 5, 2014 at 5:18 pm Reply

    I’m plannig to buy a house in about 6 months, Does it cost anything to apply to a Mortgage company and see How much Can you get from them? Does it help on the interest rate the fact that I have 100K available for a downpayment?

    Thanks for your help.

  54. Charlott June 5, 2014 at 7:57 pm Reply

    I have been trying to get approved for a mortgage loan for a while, and I really frustrated, I have good credit, my score is 730, but I’m only 22 and I’m in school full time so I only work 25-30 hours a week which is not considered full time and makes my income seem low, but I have been paying rent (never late) for a long time. If someone can pay rent and afford it why can’t they get a mortgage loan. I do not have a co-signer. Is there anywhere I can get a loan!!!??? I’m not looking for advice on why I should just keep renting, (not trying to be rude but that is what happened last time I asked this question) I am looking for an actual answer, the people I have talked to so far have just been so inconsiderate. One lady told me to re-apply after I graduated college and got a full-time job. I just want a mortgage loan, I just do not understand why I cannot get one. I have money to put down but that doesn’t eben seem to matter! If anyone knows where I can get a mortgage loan please please let me know. Amd rural development is not an option they said my income was to low.
    The reason I feel I could afford a mortgage is because my rent is higher than other peoples mortgages that I know and I have never been late

  55. Ignacio June 14, 2014 at 1:32 am Reply

    I’m supposed to be finished closing on buying a house next week.

    I was getting a mortgage through Bank of America, and was pre-approved.

    now, we’re down to finalizing the paperwork, and they JUST informed me YESTERDAY that i was supposed to have “Reserves” in my account (money equal to the amount of 2 months mortgage payments) .. but i dont have that money in my account.

    they said even if i could deposit that amount in my account tomorrow, it wouldnt matter b/c i needed to be able to show that it’s my own money, not a gift.

    so they said they might be able to make an exception, since i have 1/2 the required amount in my account. how often do they still approve loans with exceptions?

    if i dont get approved, i’ll lose the house i was supposed to be closing on next week 🙁

  56. Elmira June 17, 2014 at 10:24 pm Reply

    Do illegal immigrants pay their mortgage? and how does that affect our mortgage situation in the United States?

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