Financing in Santa Ana>Question Details

Maggie Masan…, Home Buyer in

The minimum payment on my mortagage is $1,700 but is not enough cover the interest and prevent negative

Asked by Maggie Masaniai, Thu Jan 17, 2008

amortization. The next payment option offered is $2,800 which will cover interest and a little portion applied to the principal. This option is not affordable at this time. WHAT IF I PAID $2,000 / MONTH. WOULD THAT HELP OR HURT ME? HOW WOULD THE MORTGAGE COMPANY APPLY IT?

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Hello Maggie,

A very important question is, "When or is your loan maturing (meaning, is it requiring you to pay more than the minimum payment)?" Do you have the option to make 3 different payments, such as, a) Minimum payment, b) Interest only or c) Full 30 year amortized payment? If so, then you can pay any of those amounts. Usually the bank has set it up where any payment above the minimum first pays interest, then anything above the minimum+interest would obviously pay down the principle. Because the idea is that if you don't pay the interest, you are adding to the principle. So it goes to say that if you paid principle (and not interest) you wouldn't be making a difference on the total principle owed, because the interest just gets tacked on.

If you are interested in additional advice, with no obligation, I would recommend calling a lender. I have worked with Kevin Piel at Terra Mortgage. His number is 714-342-0002.

Best of luck,
Robert M. van der Goes
1 vote Thank Flag Link Thu Jan 17, 2008
Hi Maggie,

You are one of many in this situation and I would like to offer you this phone number (714) 394-0506. This is Nate Lindsey's phone number and he is the lender I refer to anyone with questions. I've known him for two years and he is, hands down, a lending genius! Everyone I have had contact him has come away more knowledgeable and everyone who has used him, will use him again or will refer him to their friends and family.

What I like about him is that if it isn't a good time for you to refi, he will tell you. (He told this to one of my clients yesterday and I even have my parents coming to see him today.) He actually trains CPA's so isn't your run-of-the-mill lender. I hope you find the solution you are looking for, but please don't wait until the last minute when you cap on that negative am.
Web Reference:
0 votes Thank Flag Link Thu Jan 24, 2008
Sell your house and buy something you can afford to pay for. A new hot water tank, roof, car or medical bill or vitrually any of life's normal and USUAL inconveneience will destroy your delicate balance. Plan ahead and be smart with your life, you only get one try at it.
0 votes Thank Flag Link Fri Jan 18, 2008
Depending on what your home is worth and how much your mortgage is (= LTV-Loan to Value), you might want to think about refinancing out of your negative amortization loan (highly risky). Since your only paying the minimum payment each month, your loan amount is increasing each month. Once your grace period is up and your minimum payment option goes away, your mortgage payment will be over $1,000 more each month. REFINANCE NOW to at least a 5 or 10 year interest only loan so your loan amount doesn't keep increasing about $1,100 each month (neg am amount). Or you might have to sell your house if you can't afford to refi.
I'm a Sr Loan Officer with CHASE and would happy to speak with you.

Rick Dean
Sr Loan Officer
CHASE Home Mortgage
Web Reference:
0 votes Thank Flag Link Fri Jan 18, 2008
Hello Maggie-
If you pay an additional amount of $300 toward your principal balance each month, you most certainly are ahead, you are reducing your Principal Balance each month. It may not be a reduction of $1100, but it is $3600 over 12 months. Each time you make a payment, remember too that your principal was just reduced a tiny bit - so the following month, the interest calculation on your remaining balance is a tiny bit less. Again, inch away at it, and you are doing the right thing. If you are pressured into a refinance, remember - You MUST factor costs. At a minimum, $4000 to $6000 (depending on your balance) - You could just apply that toward your principal! (Yes, I realize you may not have this in your wallet, but you see the point - Your balance just went up so that you can pay it down?) You have to analyse your Return on costs to see if it's worth it.

I hope that helps! -- and I'm not a lender - so my advice is clearly unbiased 3rd party help

(In all fairness to the lenders, if they can provide you with the Terms (remember TERMS is not just RATE, or RATE and Points.. it is all THREE; Rate, Points and Closing Costs - they are NEVER FREE, they just jack up the % rate for Bank rebate $s to cover Costs)

Best of luck !
0 votes Thank Flag Link Thu Jan 17, 2008
Hello Maggie,

It looks like you are going back ward about 1100 per month if you send 2000 you will be going backwards only 800. In today market you could get a loan that is fixed and not worry about the negative amortization at all. Send me some information like the loan amount and if you could document your income and I will be able to give to you a quote that will help you whether you use me or someone else the quote should help.

Kal Ibrahim
The Mortgage Corner, Inc.
0 votes Thank Flag Link Thu Jan 17, 2008
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