Loans and Mortgages - Credit and Debt - Repairing Credit Score - Planning a Budget - Other Finance
Q. I was wondering how to figure out how to get a LTV amount.A. LTV is Loan to Value. This is a ratio, usually expressed as a percentage between the appraised value of a property and the amount of the outstanding loan. So if you are buying a $100,000 property, with a loan for $80,000, your LTV is 80 percent. Conversely, if your loan balance is $117,500, and you want to see if your lender will drop your PMI, they will probably tell you that your LTV has to be 80 percent or less. So unless you know that your appraisal is going to be over $146,875 (117,500 divided by .80), this would not be possible.
Q. I realize that most home loans are scheduled interest. I found a company that does simple interest. That is where the interest is recalculated every time a payment is made, thus saving you a lot on interest. I was just wondering if there are places that do this.
A. All mortgages are simple interest. Every time you pay down your mortgage, you can easily figure up your interest paid. Each payment on a typical mortgage lowers the amount you pay towards interest and increases the amount of your payment applied towards principle. That's why interest only loans are such a bad idea.
Some small, short-term loans that are 60 months or less in term can be a different situation, not in the favor of the borrower. You accumulate interest daily on your loan. Your payoff on March 10th is lower than if you pay off on March 11th, by $15.07, and so on.
$100,000 * 5.5% = $5500
$5500/365 = $15.07 interest per day
$15.07 * 30 days = $452.10 for that month
Then, make your payment, the principle comes down and it's refigured due to the lower principle balance. Your payment does not change, but they amount of it applied towards interest does, since you have a lower principle balance. So, more is applied towards principle.
Q. Let's say I have a house that is $200,000 on an interest only payment, and I pay about $1100.00 a month payment only. About how much do I get back on my taxes since the entire loan is tax deductible? In addition, let's say I have some kind of loan where I do pay the principal. What kind of ballpark figure would I be paying towards the principal in three years?
A. You need to get two amortizations schedules: one for a typical loan, paying on the principle, and another for the interest only. Take those to your tax preparer and ask him to tell you how much more you'll get back based on paying more interest each year for a few years. You can look at them and tell how much you'll pay down the principle at any point in the loan vs. paying none down on the interest only.This is an easy thing for your broker to do, and it will answer a lot of your questions.
Q. My wife owns a business. We are looking at buying the building she rents. Are their any banking or credit programs for minority woman business owners?
A. A banking institution will or may have its own lending criteria. Contact a local branch for each individual lender in town directly. Second, contact your city or county lending services. They may offer "Bond Money" or grants for starting a new business, especially "minority" businesses. Third, contact a true commercial lender in town. Ask them where to get the help. They might even be an affiliate for the loan. The local city or county is where you will probably find the most help.
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