Tag Archives: equity

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Breakdown Of Your Monthly Mortgage Payments

We discussed PITI Payments are. In short it is the total payments due on your mortgage.  To recap:

PITI Payments is the components of a mortgage payment.

PPrincipal is the money used to pay down the balance of the loan

IInterest is the charge you pay to the lender for the privilege of borrowing the money

TTaxes refer to the property taxes you pay as a homeowner

I – Insurance refers to both your property insurance and your private mortgage insurance  and homeowners association fees if applicable.

Just bought your house?

What does my mortgage bill look like?

Your mortgage bill will include all of these numbers. You will be making one payment to your bank and they will make the Taxes and Insurance payments for you.

How does that work?

What happens is your bank opens an escrow account for you. Every time that you make your monthly payments, it goes into escrow. Lets make up some numbers.

Mortgage $400,000 @ 4% will equal monthly to ~ $1,900 ($1,909.66, based off of $576.33 in principle and $1,333.33 in interest)

Taxes $12,000 will equal monthly to $1,000

Insurance $1,200 will equal monthly to $100

When your bill arrives all of these charges will be consolidated into one charge of $3,000. When you pay the bill the bank will keep $1,900 of the money and put the other $1,100 into your escrow account. Then would then pay the property taxes quarterly. so after 3 months of collecting your $1,000 taxes they would then ship off $3,000 to your county to cover the property taxes on your home.

The same is true with the insurance on the house. The bank collects the insurance payments from you, and then pays the insurance company the monthly premiums. This setup is great in my opinion. instead of needing to worry about every payment on the house, the bank takes care of it for you.

So, when you hear your friend saying he has a $3,000 mortgage you know that only $575 is actually going to pay off his house and building equity. Pretty depressing if you think about it!

View our home buying series here: Mortgages, Home Loans, Refinance, and Interest

And don’t forget to follow us on Twitter to be entered into our $50 Giveaway!

In Summary

PITI Payments is all the payments lumped together into one monthly obligation.

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Lender Discrimination: What Is That?

portal.hud.gov hudportal documents huddoc id NFHA2012MaternityLendingEN.pdf

“Lender Discrimination was not what I was expecting.”

What is lender discrimination? Were you a victim? What should you do? I once saw an ad inn the mall of a pregnant woman, the caption was “Lender Discrimination was not what I was Expecting“. The caption summed up the advertisement. A lender may NOT deny loans to one or more groups of people primarily on the basis of race, ethnic origin, sex or religion. One of the most notable instances of widespread mortgage discrimination occurred in United States inner city neighborhoods from the 1930’s up until the late 1970’s. There may be evidence that the practice of lender discrimination still continues in the United States today.

How can You protect Yourself from lender discrimination?

Look for the warning signs, some include:

  • You are treated differently in person than on the phone.
  • You are discouraged from applying for credit.
  • You hear the lender make negative comments about race, national origin, sex, or other protected groups.
  • You are refused credit even though you qualify for it.
  • You are offered credit with a higher rate than the one you applied for, even though you qualify for the lower rate.
  • You are denied credit, but not given a reason why or told how to find out why.
  • Your deal sounds too good to be true.
  • You feel pushed or pressured to sign.

If You Suspect Discrimination

Take action if you think you’ve been discriminated against.

  • Complain to the lender. Sometimes you can persuade the lender to reconsider your application.
  • Check with your state Attorney General’s office to see if the creditor violated state laws: Many states have their own equal credit opportunity laws.
  • Consider suing the lender in federal district court. If you win, you can recover your actual damages and be awarded punitive damages if the court finds that the lender’s conduct was willful. You also may recover reasonable lawyers’ fees and court costs. Or you might consider finding other people with the same claim, and get together to file a class action suit.
  • Report any violations to the appropriate government agency. If your mortgage application is denied, the lender must give you the name and address of the agency to contact.

“Lender Discrimination was not what I was expecting.” This was the caption under an advertisement i saw in a mall. It was educating the public about Lender Discrimination.

File a Complaint with the appropriate offices.

For ECOA violations:

Consumer Financial Protection Bureau

855-411-2372

For FHA violations:

U.S. Department of Housing and Urban Development (HUD)

1-800-669-9777; TDD: 1-800-927-9275

For details about the Fair Housing Act, contact Office of Fair Housing and Equal Opportunity.

You have one year to file a complaint with HUD, but you should file as soon as possible.

MORE WAYS YOU CAN PROTECT YOURSELF

  • Do your research. Shop around. Learn about the various features and downsides of the credit product you want. Research the current interest rates. Compare products from several lenders.  Talk to your friends and family members about their credit products.
  • Know your credit history. Creditors will make decisions based on your credit history. Be sure there are no mistakes or missing items in your credit reports. Get a free copy of your credit report from each of the three biggest consumer reporting agencies every 12 months. Get your free copy from AnnualCreditReport.com.
  • Ask questions. Don’t focus only on your monthly payment. Be sure you understand the rates and fees you will pay over the long run. Ask whether the rates and fees quoted to you by your lender are set, or if there are any circumstances in which the quoted rates and fees could change. Keep asking questions until you are fully satisfied. If a creditor does not want to answer your questions, this could be a bad sign.
  • Stay in control. Your lender shouldn’t make you feel rushed, or unnecessarily delay action on your application. Walking away and continuing the discussion later, if you so choose, is a good way to control communications with the lender.
  • Don’t sign until you’re satisfied that the credit product works for you. Remember, the product that works for you today may not work for you down the road. Make sure you’ve considered both before you sign.

HT: Wikipedia, Consumer Finance and Government websites.

View our home buying series here: Mortgages, Home Loans, Refinance, and Interest

And don’t forget to follow us on Twitter to be entered into our $50 Giveaway!

In Summary

We aware of Lender Discrimination,and what to do if you are a victim.

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Home Equity. What It Means

Home equity is your share of the value of your home. It’s what you truly “own” versus the part that is owned by the bank. To make it easy to understand we will give an example. Let’s say you bought a home for $250,000 and put down $30,000. Then your equity will be only $30,000 not the full value of the house.  A few years down the road you already paid part of your mortgage of $50,000, but most of that went to interest. Only the part that went towards the principle will be counted as equity. Suppose $20,000 went towards the interest then you would have amassed a total of $50,000 in equity.

Another way to amass equity

Equity can also grow if the value of your house goes up. Using the numbers above, and the value of your home increases to $300,000, your total equity would be $100,000 ( $50k for the increase of value, $30k of a down payment, 20k in monthly payments.)

Watch your equity grow every month with your monthly payments. Use a mortgage Calculator that shows you how much money is going toward your equity.

Equity is the total value of your house that you own. Only the part of the mortgage that goes towards the principle would build your equity. Interest payments do not build equity.

Why is Equity important?

Equity is an asset, so it’s a part of your total net worth. You can spend it someday if you need to. You might use it to buy your next home, to fund your retirement, or to pay for a child’s education. It’s a very large and important asset.

View our home buying series here

And don’t forget to follow us on Twitter to be entered into our $50 Giveaway!

In Summary

Equity is the value of your home.

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Mortgages, Home Loans, Refinance, and Interest

We will begin a new series today on Home loans. We will cover many topics from what to look for in buying a house through the home buying experience all the way to refinancing years later.

Here are some of the topics we will discuss. Bookmark this page as we will link back to all these topics once they are written.


And many more topics. Stay tuned!

And don’t forget to follow us on Twitter to be entered into our $50 Giveaway!

In Summary

Stay tuned to learn more about buying a home.

 

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