Some Guru asked:
My parents bought a house for $500k in January of 2008 and made a down payment of $100k,leaving them with $400k left to pay.Is it true that if they refinance our house they have to pay $400k even if they paid off some of the loan?
DICK
My parents bought a house for $500k in January of 2008 and made a down payment of $100k,leaving them with $400k left to pay.Is it true that if they refinance our house they have to pay $400k even if they paid off some of the loan?
DICK
JOHNATHON
No, the amount to be refinanced will be what they owe now on the house. But it’s possible they have paid very little toward their mortgage. The first few years, most of the payment gets applied to interest and very little is applied to principal. So, they probably owe pretty close to the original mortgage amount.
It’s even possible they owe more than $400,000 if they have the type of loan that allows negative amortization. These are not very common, but they sometimes are offered to keep payments low on an expensive home.
Your parents need to call their mortgage lender and ask for the payoff amount. That is how much they’ll need to refinance.
Comment by doreen k — February 11, 2010 @ 11:06 am