Home Mortgage...did we carry screwed?
I feel a little taken avantage of. Hubby and I qualified for a $100,000 loan within Ohio (FHA loan). We are first time home owners and feel that we got the coarse end of the deal. The loan itself is nice. We bought our house for $96,900. We didn't put down a deposit on it, the woman that we bought the house from put down One Thousand and something dollars. We have a fixed intrest rate of 5.9%. Well they have also added on a second mortage for the downpayment that we didn't put down. (I reason that is what the 2nd mortgage is for) It was almost $4000, beside a 7.9 fixed intrest rate. I am really confused (BTW, we have lived in our house over a year now), isn't it resembling this : we bought our house for 96,900 (lady put in an extra thousand something)...but have a 2nd mortgage of around $4000. It is resembling we have spent $100,900 on our house? This is probaby confusing, but I don't want to sound silly calling up our ridge and asking them. If someone can make sense of this to me...
I hope it makes sense!
Answers:
It sounds to me that you loan officer/broker did you a dis-service.
You qualified for an FHA therefore you could have qualified for the Nehemiah Grant Program or the rule approved Sovereign Grant Alliance.
Regardless what your LO may tell you Nehemiah is still in business. They would enjoy provided you with the necessary funds for your down salary and closing cost. Granted this is contingent upon approval from the seller due to funds required come from his/her proceeds. Obviously the seller be not willing to part near funds.
Nevertheless you should have been advise regarding options available to you so you could form an intelligent decision on whether to buy your current home or select another with a dealer that was more forgiving of your situation.
Good Luck
are you making payments on the 4 K sounds to me like explicitly the money the FHA loan gave to you to cover the costs, ( it is like a grant) you do not construct payments on it you just have the loan within and should you sell the house the loan becomes due and payable at close if you dont i beleive it a short time ago sits there
every active loan holder will get hold of a end of year statement from your mortgage holder. IF you haven't gotten yours call them. You entail it for income tax filing anyway.
Yes, it seems the second mortgage is for the downpayment you didn't own. I would think the 4000 is included in the 96.9. Asking roughly it now seems for a while silly. It's probably explained in detail in the paperwork.
However, I'd simply brand an appointment with the bank and receive it explained again to your satisfaction.
I cant speak for certain without looking at adjectives of the legal doc, but it doesn't appear that you got a desperate deal. My first thought is that given that the total of both loans is higher than the pro of the home it likely includes some closing costs.
Just because you qualified for 100K doesn't mean you can win it without putting up a down payment. The FHA predictable offered to give you up to 100K (in a first mortgage) subject to some down payment requirement - example you want to buy a home that is to say 105,250 and FHA will loan you up to100K as long as you put down 5% of the homes value. You put down 5,250 and the bank make the 100k loan. Simple idea without closing costs etc, but it make the point.
You have a second mortgage which acts as substitute for your down fee - in other words it meets the FHA's down compensation requirement of 5% or whatever it happens to be.
Your first mortgage is fully secured by the asset, your house. The Bank have the legal right, should you not pay, to cart possession of your home and sell it to recoup the money they loaned you. Given this right, within is less risk for the bank, so you pay envelope a lower interest rate on this loan.
Here is why you cant get a loan for 100% of the value of the house and consequently why your FHA loan be 96.9k rather than 100K: When a bank forecloses and assets enjoy to be liquidated (sold) to recover the meaning of the loan, these assets (your house) rarely ever bring in 100% of the initial purchase worth (in your case $100,900). Why? because you have to hire relations to sell it(cost money) and the banks typically try to put up for sale the asset in the shortest time period possible (results surrounded by a lower selling price) and many foreclosures occur when home prices are flat or going down (it might be worth smaller quantity than you purchased it for). All of these factors lower the net proceeds to the sandbank. This is why banks don't like to lend 100% of a homes expediency - they will rarely ever get adjectives of this money back should something bad start. Looks like they financed 96.9 % of the value of your untried home - this is a very good percentage for a borrower - Banks recurrently refuse to loan any more than 90% of the value of a home - given what have been happing in the housing bazaar you can probably understand why.
The second loan is often secured by your personal promise to reward (credit) and rarely anything else. Sometimes it is a second mortgage (in a foreclosure the loan has a lower claim to proceeds from Dutch auction of your home).
Given the concepts above, should you default on your home loans, there may not even be ample money after the sale to pay past its sell-by date the first mortgage let alone the second. Your first mortgage has the right to proceeds from a foreclosure Dutch auction, your second mortgage does not - and if it does have any right it only get money after the first mortgage is completely paid off (for your citation: this is called structural subordination).
Your second mortgage is essentially an unsecured personal loan and riskier to the bank and thus the high rate. Anecdotally, 7.9% is not a bad rate at all on this type of loan.
As a caveat: tons individuals think that they can choose not to pay their second loan in need any risk to their home, because this loan has no senior claim to the assets or is completely unsecured. This is rarely true. Most first mortgages own a "cross-default" provision. This means that even if you pay the first but don't reward the second it will still be considered a default for both loans - and the bank can foreclose.
Let me know if this answers your sound out or if you have any others.
Best.
Jingle e-mail...
It makes sense to me. You bought a house for $96,900 plus
$4,000 to cover the closing expenses (including down payment).
Yes: Your total debts are $100,900.00. This is on
2 mortgages, one for 5.9% and the other for 7.9%.
Do you enjoy any credit card bills?
If you did not pay for the house, How much would you be paying
for a roof over your head? The answer to these question is the
determining factor as to "BEING TAKEN OR NOT".
The thing to do at this time is "PUT 25% OF THE MORTGAGE PAYMENTS"
in your guard account each week. If the mortgages are adjustable, add on 10% more.
This will let you know how much money you have to live on in need
fear of not making the mortgage paymnets (as long as you dont cheat).
If the cost of your property is less than 125% of the appraisal
of the property, you are contained by good condition. 99% of American
home owners start this way, 90% ruin it by taking out loans on
what appear to be free money. (THAT IS WHAT THEY WERE
CALLING THE SECOND MORTGAGE) - now you know it is
not FREE.
When you get an FHA loan you are automatically charged what is call "up front Mortgage insurance". It is something like 3% of your loan amount. I have never hear of banks giving a second mortgage for that amount but the up front MI is a bad one.
Related Questions:
What is the difference between refinancing a mortgage and getting home equity smudge of credit?
My mom wanted to know! =] Thanks! Refinancing a mortgage means your getting a lower interest rate (it may lower your monthly payments). Equity lines for homes are for home owners who want to do home recovery projects but...
I hope it makes sense!
Answers:
It sounds to me that you loan officer/broker did you a dis-service.
You qualified for an FHA therefore you could have qualified for the Nehemiah Grant Program or the rule approved Sovereign Grant Alliance.
Regardless what your LO may tell you Nehemiah is still in business. They would enjoy provided you with the necessary funds for your down salary and closing cost. Granted this is contingent upon approval from the seller due to funds required come from his/her proceeds. Obviously the seller be not willing to part near funds.
Nevertheless you should have been advise regarding options available to you so you could form an intelligent decision on whether to buy your current home or select another with a dealer that was more forgiving of your situation.
Good Luck
are you making payments on the 4 K sounds to me like explicitly the money the FHA loan gave to you to cover the costs, ( it is like a grant) you do not construct payments on it you just have the loan within and should you sell the house the loan becomes due and payable at close if you dont i beleive it a short time ago sits there
every active loan holder will get hold of a end of year statement from your mortgage holder. IF you haven't gotten yours call them. You entail it for income tax filing anyway.
Yes, it seems the second mortgage is for the downpayment you didn't own. I would think the 4000 is included in the 96.9. Asking roughly it now seems for a while silly. It's probably explained in detail in the paperwork.
However, I'd simply brand an appointment with the bank and receive it explained again to your satisfaction.
I cant speak for certain without looking at adjectives of the legal doc, but it doesn't appear that you got a desperate deal. My first thought is that given that the total of both loans is higher than the pro of the home it likely includes some closing costs.
Just because you qualified for 100K doesn't mean you can win it without putting up a down payment. The FHA predictable offered to give you up to 100K (in a first mortgage) subject to some down payment requirement - example you want to buy a home that is to say 105,250 and FHA will loan you up to100K as long as you put down 5% of the homes value. You put down 5,250 and the bank make the 100k loan. Simple idea without closing costs etc, but it make the point.
You have a second mortgage which acts as substitute for your down fee - in other words it meets the FHA's down compensation requirement of 5% or whatever it happens to be.
Your first mortgage is fully secured by the asset, your house. The Bank have the legal right, should you not pay, to cart possession of your home and sell it to recoup the money they loaned you. Given this right, within is less risk for the bank, so you pay envelope a lower interest rate on this loan.
Here is why you cant get a loan for 100% of the value of the house and consequently why your FHA loan be 96.9k rather than 100K: When a bank forecloses and assets enjoy to be liquidated (sold) to recover the meaning of the loan, these assets (your house) rarely ever bring in 100% of the initial purchase worth (in your case $100,900). Why? because you have to hire relations to sell it(cost money) and the banks typically try to put up for sale the asset in the shortest time period possible (results surrounded by a lower selling price) and many foreclosures occur when home prices are flat or going down (it might be worth smaller quantity than you purchased it for). All of these factors lower the net proceeds to the sandbank. This is why banks don't like to lend 100% of a homes expediency - they will rarely ever get adjectives of this money back should something bad start. Looks like they financed 96.9 % of the value of your untried home - this is a very good percentage for a borrower - Banks recurrently refuse to loan any more than 90% of the value of a home - given what have been happing in the housing bazaar you can probably understand why.
The second loan is often secured by your personal promise to reward (credit) and rarely anything else. Sometimes it is a second mortgage (in a foreclosure the loan has a lower claim to proceeds from Dutch auction of your home).
Given the concepts above, should you default on your home loans, there may not even be ample money after the sale to pay past its sell-by date the first mortgage let alone the second. Your first mortgage has the right to proceeds from a foreclosure Dutch auction, your second mortgage does not - and if it does have any right it only get money after the first mortgage is completely paid off (for your citation: this is called structural subordination).
Your second mortgage is essentially an unsecured personal loan and riskier to the bank and thus the high rate. Anecdotally, 7.9% is not a bad rate at all on this type of loan.
As a caveat: tons individuals think that they can choose not to pay their second loan in need any risk to their home, because this loan has no senior claim to the assets or is completely unsecured. This is rarely true. Most first mortgages own a "cross-default" provision. This means that even if you pay the first but don't reward the second it will still be considered a default for both loans - and the bank can foreclose.
Let me know if this answers your sound out or if you have any others.
Best.
Jingle e-mail...
It makes sense to me. You bought a house for $96,900 plus
$4,000 to cover the closing expenses (including down payment).
Yes: Your total debts are $100,900.00. This is on
2 mortgages, one for 5.9% and the other for 7.9%.
Do you enjoy any credit card bills?
If you did not pay for the house, How much would you be paying
for a roof over your head? The answer to these question is the
determining factor as to "BEING TAKEN OR NOT".
The thing to do at this time is "PUT 25% OF THE MORTGAGE PAYMENTS"
in your guard account each week. If the mortgages are adjustable, add on 10% more.
This will let you know how much money you have to live on in need
fear of not making the mortgage paymnets (as long as you dont cheat).
If the cost of your property is less than 125% of the appraisal
of the property, you are contained by good condition. 99% of American
home owners start this way, 90% ruin it by taking out loans on
what appear to be free money. (THAT IS WHAT THEY WERE
CALLING THE SECOND MORTGAGE) - now you know it is
not FREE.
When you get an FHA loan you are automatically charged what is call "up front Mortgage insurance". It is something like 3% of your loan amount. I have never hear of banks giving a second mortgage for that amount but the up front MI is a bad one.
Related Questions:
What is the difference between refinancing a mortgage and getting home equity smudge of credit?
My mom wanted to know! =] Thanks! Refinancing a mortgage means your getting a lower interest rate (it may lower your monthly payments). Equity lines for homes are for home owners who want to do home recovery projects but...