Advertisement: Mortgages involve two critical time frames; the amortization period and the term of the loan. The term of the loan could be just as long as the amortization period that is usually 25 or 30 years that determines the size of your monthly payments. If you have a longer amortization period, then it means your monthly payments are smaller as the payments are spread out over more time. The loan term is usually only 2 to 3 years or maybe 5 years as you should have an opportunity to refinance at more preferable interest payment rate terms available on the open market instead of a bad fate rate at 10% or higher for the entire 25 year journey. The rate may go down to 3% in the next 7 years while your current rate is 5.7% pour example. ********** The amount of the mortgage loan is generally based on the amount needed to complete the purchase of the property. Your down payment may be $30,000.00. Your home purchase price is $700,000.00 so you need a mortgage loan for $670,000.00. When your loan term expires in 2,3 or 5 years, you need to refinance for the new interest rate so you deduct the payments you made over the last five years that amounts to $200,000.00 for example. Your total now owing generally is $470,000.00 but we have not deducted the principal, interest and taxes. So, it may be a bit higher and near $510,000.00. We should see the mortgage amortization computer table for more precise figures using these numbers. The market value may have gone up to $910,000.00 in three years. You are not refinancing based on new market value. You are already the owner and you are not buying the home again. But, if you were selling the home, you stand to gain $410,000.00 in equity. You are not selling but refinancing as the loan term expired and happily the market rates went down where you have an opportunity to achieve a lower monthly payment per month with a lower interest rate. Over a 25 year amortization period, you will probably refinance 5 times as the average rate term is a five year term. But, the original purchase price remains the same except the principal outstanding after five years of payments has gone down. The outstanding or unpaid loan amount has gone down. You say to the client "...your new loan amount is...$570,000.00..." as the case may be. The value may have gone up to $910,000.00. You would not say, "The new purchase price is...$910,000.00." The client is the registered owners and is not buying the property again. There is already a registered mortgage on title for $670,000.00. The problem we are having is with newbies who will try to misinform the client that the new loan rate is the new market value of $910,000.00. There is a loan difference of about $400,000.00.00. Are you making a home equity loan or completing a refinance? You are doing a mortgage refinance and should not confuse the transaction but at $910,000.00 for the new loan, you are increasing the bank's exposure and also dispensing an extra $410,000.00. The client's monthly payment is going up and they get an extra $410,000.00 that you will credit to their personal bank account with $400,000.00 as the loan is secured against their property that is the subject of the refinance. A lawyer has to update the land registry title and remove the old loan and add the new loan amount on title. But,c what if the value would fall suddenly due to a nuclear disaster down by the lake? I suppose it does not matter so long as the client makes his monthly payments until the next refinance discussion in five years when the rate expires again. If you were to sell at $910,000.00, you dont have to worry about the capital gains because this property is noted in your emotions as your principal residence. The condo you intend to buy in New Brunswick on the real Atlantic water front is an investment; real Atlantic. It's only a 2 hour flight; right? Then, there is a condo on Annotto Bay's water front you will purchase as marketed in North America through the same time share companies but you own this and only have to agree to the property being used as a rental in your absence and you get 50 percent of the rent. It's like a built in condo Air Bnb feature. I think I will get my refinance on the new principle outstanding after five years of payments which is $470,000.00 or $510,000.00 with interest and taxes. This way, my monthly payment is smaller,more manageable and then I will consider the separate discussion involving a home equity loan involving the new market value of $910,000.00 maybe for the entire equity of $410,000.00. Certainly, the bankers uncle in Caymanidad is not getting the $400,000.00 while the customer is left holding a larger debt and the bank is holding a greater loan exposure on their books. What if we just kill the owners and take everything? There are some Criminal Court scenarios now being addressed that involve the miscommunication of the mortgage principles noted above as governed by common law and statute the authorities are addressing them accordingly under the full gamut of the law with enforcement powers involving arrest and incarceration. Any miscommunication of these principles where a client or customer is impacted by that advice disinformation may amount to civil tort liability under the Hedley Byrne line of cases involving negligent misstatement. They will not hesitate. You're going down if you get this to go sideways. Angel Ronan Lex Scripta™. ******

  Advertisement:   Mortgages involve two critical time frames; the amortization period and the term of the loan.  The term of the loan could be just as long as the amortization period that is usually 25 or 30 years that determines the size of your monthly payments.  If you have a longer amortization period, then it means your monthly payments are smaller as the payments are spread out over more time. The loan term is usually only 2 to 3 years  or maybe 5 years as you should have an opportunity to refinance at more preferable interest  payment rate terms available on the open market instead of a bad fate rate at 10% or higher for the entire 25 year journey.    The rate may go down to 3% in the next 7 years while your current rate is 5.7% pour example.  

  

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The amount of the mortgage loan is generally based on the amount needed to complete the purchase of the property.   Your down payment may be $30,000.00.  Your home purchase price is $700,000.00 so you need a mortgage loan for $670,000.00.  When your loan term expires in 2,3 or 5 years, you need to refinance for the new interest rate  so you deduct the payments you made over the last five  years that amounts to $200,000.00 for example. Your total now owing generally  is $470,000.00 but we have not deducted the principal, interest and taxes.   So, it may be a bit higher and near $510,000.00. We should see the mortgage amortization computer table for more precise figures using these numbers.   The market value may have gone up to $910,000.00 in three years.  You are not refinancing based on new market value.  You are already the owner and you are not buying the home again.   But, if you were selling the home, you stand to gain $410,000.00 in equity.   You are not selling but refinancing as the loan term expired and happily the market rates went down where you have an opportunity to achieve a lower monthly payment per month with a lower interest rate.

Over a 25 year amortization period,  you will probably refinance 5 times as the average rate term is a five year term.  But, the original purchase price remains the same except the principal outstanding after five years of payments has gone down. The outstanding or unpaid loan amount has gone down.   You say to the client "...your new loan amount is...$570,000.00..." as the case may be.  The value may have gone up to $910,000.00.   You would not say, "The new purchase price is...$910,000.00."  The client is the registered owners and is not buying the property again.  There is already a registered mortgage on title for $670,000.00.  The problem we are having is with newbies who will try to misinform the client that the new loan rate is the new market value of $910,000.00.  There is a loan difference of about $400,000.00.00.  Are you making a home equity loan or completing a refinance?  You are doing a mortgage refinance and should not confuse the transaction but at $910,000.00 for the new loan, you are increasing the bank's exposure and also dispensing an extra $410,000.00.  The client's monthly payment is going up and they get an extra $410,000.00 that you will credit to their personal bank account with $400,000.00 as the loan is secured against their property that is the subject of the refinance.   A lawyer has to update the land registry title and remove the old loan and add the new loan amount on title. But,c what if the value would fall suddenly due to a nuclear disaster down by the lake?  I suppose it does not matter so long as the client makes his monthly payments until the next refinance discussion in five years when the rate expires again.  

If you were to sell at $910,000.00,  you dont have to worry about the capital gains because this property is noted in your emotions as your principal residence.    The condo you intend to buy in New Brunswick on the real Atlantic water front is an investment; real Atlantic.  It's only a 2 hour flight; right? Then, there is a condo on Annotto Bay's water front you will purchase as marketed in North America through the same time share companies but you own this and only have to agree to the property being used as a rental in your absence and you get 50 percent of the rent. It's like a built in condo Air Bnb feature.  

I think I will get my refinance on the new principle outstanding after five years of payments which is $470,000.00 or $510,000.00 with interest and taxes. This way, my monthly payment is smaller,more manageable and then I will consider the separate discussion involving a home equity loan involving the new market value of $910,000.00 maybe for the entire equity of $410,000.00. Certainly, the bankers uncle in Caymanidad  is not getting the $400,000.00 while the customer is left holding a larger debt and the bank is holding a greater loan exposure on their books.  What if we just kill the owners and take everything?   

There are some  Criminal Court scenarios now being addressed that involve the miscommunication of the mortgage principles noted above as governed by common law and statute the authorities are addressing them accordingly under the full gamut of the law with enforcement powers involving arrest and incarceration.  Any miscommunication of these principles where a client or customer is impacted by that advice disinformation  may amount to civil tort liability under the Hedley Byrne line of cases involving negligent misstatement.  They will not hesitate.  You're going down if you get this to go sideways. 

Angel Ronan Lex Scripta™.   

 

  

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