So wait. If I sell my house now, how much does the bank get?
You’re scaring me.
I know what they get if I don’t sell it. They get monthly payments, much of which is deductible to me as interest, right?
But what if I sell it?
Essential Economics for Politicians
- Thread starter Bruddah IZ
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- finance too
You’re scaring me.
I know what they get if I don’t sell it. They get monthly payments, much of which is deductible to me as interest, right?
But what if I sell it?
You mean my loan liability? You are blowing me away this morning. Did you learn this on your own? Or did you go to some kind of mortgage school?
Bruddah IZ
DA
Yes a lien on your house.
Yeah, makes sense. He seems like he could teach you a lot.
So now that you know the basics, get in touch with him and go deeper.
Bruddah IZ
DA
I did. He said that you're a good mortgage payer and that you realize failure to do so would result in foreclosure proceedings. But the bank isn't worried because they have your equity locked up which includes your 20% down payment.
Man, now you are delving into the concept of “securitization” of the mortgage loan? Holy moly, Fries taught you well.
And what happens when you finish paying back the loan, with interest? Or what happens when you sell?
So, take my case for example. I bought a 2800 sq foot house in the high 800s. I keep paying the darn bank, mostly interest(!), while I live there.
I can probably now sell it for about $4m. How much of that would the bank get?
Wait, the bank has my down payment? Didn’t the person who sold me the house get my down payment? Please explain. I thought the bank loaned me money?
Bruddah IZ
DA
No but the bank does control 100% of your equity if you enter foreclosure and, yes the seller got 100% of the purchase price. That's why you don't have to pay PMI.
You mean if I default on my loan I don’t own the house? OMG I can’t believe you’re giving me all this great info for free! Thanks, Iz!
Bruddah IZ
DA
Probably? lol! Didn't you refi 100k for education?
Yes but my rates went way down at the same time. I owe about $500. How much would the bank get if I sold the house?
Bruddah IZ
DA
Depends how much you owe when you sell. Lets not forget the buyers willingness to pay what you think you can get.
So wait I pay the bank what I owe and I get to keep the rest? Crazy!
Bruddah IZ
DA
Congratulations. You no longer have a liability.
Multi Sport
DA
What are the terms of your loan and when did you take it out?
Multi Sport
DA
That's presuming you have the cash on hand to pay off the loan in full. Do you?
Bruddah IZ
DA
Easy Multi. Let him roll in all that cash he's earning a ton of interest on.
So let me get this straight. A loan, ie a debt, is a liability? You are like, as someone once said (well, more than once), an economical jenious. Thanks for sharing your knowledge!
Do you mean if I pay the bank loan back it presumes I have the money to do it? What a great question! I see why you and Iz are friends!
The latest version is 3.15% for 15 years, which I took out about 8 years ago. About $500K left.