However, since I was suspicious of the kind of mortgage he was talking about, I told him to bring his letter to me and we could figure out exactly what he could qualify for. Instead Randy Johnson Jersey , he invited me to his house. I thought it was a good idea because he has a billiard table and it might be some consolation to him, that as I was putting his dream of living in a mansion on hold, he would be annihilating me at 8-ball. I came to his house prepared. I found out that a $310,000 mortgage for 30 years with a $999 monthly payment is a 1% interest mortgage. Then, when I read the proposal he had received, it was as I had expected. What this letter was offering was a negative amortization mortgage. I had to read some very small print but after I did, here's what I found out. Once you close on the $310,000 mortgage, you have up to three years in which they will accept a minimum monthly payment of only $999. During these three years, regardless of what you're paying, the mortgage is a 7% mortgage. In order to amortize normally Norichika Aoki Jersey , or be paid off normally, a $310,000 mortgage at 7% for 30 years requires a monthly payment of $2,062.44. This $2,062.44 includes interest and principal. In the early stages of a negative amortization mortgage, no principal is paid. The entire payment goes toward paying the interest on the loan. The interest due on the first payment of this loan is $1,808.33. Since the payment will be $999, $809.33 ($1,808.33-$999) will be added to the principal. Since this mortgage will have a principal that is increasing instead of decreasing, it is what is known as a negative amortization mortgage. With the terms of this mortgage, it would accumulate $32 Nelson Cruz Jersey ,316.76 more debt over 3 years, which when added to the $310,000 original mortgage, totals $342,316.76 principal owed. When the negative amortization period of the mortgage ends, the mortgage becomes a regular mortgage. In this case, that happens after 3 years. Then, there is 27 years left to pay the $342,316.76 owed at 7 %. This would take a monthly payment of $2,354.51. A far cry from $999 a month! Remember, all these numbers were for a $310 Luis Sardinas Jersey ,000 mortgage; my friend was looking to apply for twice that much because he feels he could make a $1,998 monthly payment. Instead, after 3 years his payment would be $4,709.02!
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