From the monthly archives:

August 2008

August 30, 2008

Bridge Loan

Today’s article explains the equity way to close the financial gap between the new and the old homes’ mortgages. A lot of people count on the money they are going to get from selling their current home to make a proper down payment on their new home and start a new mortgage. Unfortunately, many properties [...]

August 13, 2008

What is the minimum down payment required to buy a home?

Actually, there is no limit to the size of a down payment. It can even be 0% with certain kinds of mortgages, but you have to be able to qualify for it.  Another tricky part here is the Mortgage Insurance. If your down payment is lower than 20% of the purchase price (or the appraised [...]

August 8, 2008

Is there a way to amortize an interest-only mortgage?

Normally, your monthly payments do not include anything to be paid towards the principal during the interest-only period of your mortgage. On the one hand, it makes these payments lower; on the other hand, when the interest-only period is over you have to face the debt you borrowed years ago in its full size again, [...]

August 6, 2008

How come I have been paying my mortgage for 2 years, but the balance is actually growing?

This very unpleasant situation is called negative amortization. The most likely causes are: i) You have an adjustable rate mortgage with a payment cap that does not allow you to raise your monthly payment enough to match the new interest rate. As a result, your monthly payment is probably high enough to cover the principal [...]

August 6, 2008

How come I have been paying my mortgage for 2 years, but the balance is (practically) unchanged?

The reasons for that can be: i) If your have a conventional fixed-rate or adjustable rate mortgage, and it is really as young as 2 years, it is natural for the balance to reduce insignificantly because of the “leveling” of monthly payments. You can find a more detailed explanation in my article about FRMs; but [...]

August 1, 2008

How to avoid PMI or get rid of it sooner?

A borrower has to pay Private Mortgage Insurance (PMI) only if he cannot make a 20% down payment. So, the ways to avoid the insurance are the ways to find enough cash to be able to pay at least 20% of the price of the property in question. Nowadays, the following options are available: a [...]