Mortgage Lender in Glen Cove (888) 464-8732

What questions should I ask a mortgage lender in Glen Cove ? If you’re dealing with a mortgage broker there’s some questions that you should ask both on your first meeting with the mortgage broker and throughout working with your mortgage broker to make sure that you’re getting the best service possible.

USDALoanInfoNewYork is going to go through 10 different questions that you can ask your mortgage lender in Glen Cove. Be aware that your USDA Loan or Mortgage broker  will be getting the loan that you need and the service that you want.

The first question that I think everyone should ask a mortgage broker is a pretty straightforward one.

How Much Will a Mortgage Broker Cost?

Most mortgage lenders in Glen Cove actually work for free.

So it doesn’t actually cost you anything in order to do it.

They get money because they are paid by the banks when you successfully get a loan.

So they get a small commission of the loan that you apply for and if you get it.

What Can You Do As a Mortgage Lender If a Borrower Dies Before Paying

So most mortgage brokers in Glen Cove will work for free and it won’t cost you anything.

However, there are some mortgage brokers out there who do require deposits or who do require you to pay.

So, it’s important to ask, “How much will this cost me?” when assessing which mortgage broker you want to go with.

How much do Mortgage Lenders earn in commission from me and from my loan?

This is less to understand exactly how much they make.

You can see what percentage of commissions they make and things like that by visiting USDALoanInfo.

But it’s more to understand whether or not they’ll be willing to give you this information.

A transparent mortgage broker is someone that’d be willing to give you this information and you know that they have your best interest at heart.

Lender's Mortgage Insurance Explained

If they skirt around this issue and they don’t tell you how much they earn.

Well then that would send out red flags for me because I can’t trust them to put my best interest at heart because there are some circumstances where one loan will earn them more money than a loan that could potentially be better for me but not as good for them.

Usda Loan Eligibility

So, I’m just trying to establish whether or not this mortgage broker in Glen Cove is someone that I can trust.

And by asking them the big question, the money question,”How much will you earn from me?” That’s a great way to understand whether or not you can trust the mortgage lender.

So ask that question and see how they respond.

Do Mortgage Lenders Invest Themselves?

Now, I don’t think a mortgage broker has to be a property investor in order for them to be able to get you a good loan and for them to help you successfully invest in property.

House Mortgage Rates

However, if they are interested in property in Glen Cove, if they do invest themselves, then that is going to go a long way to help you because they understand what it’s like to be in your shoes.

They understand what you’re trying to get out of this and they’ve done it themselves so they can help you miss some of the pitfalls and things like that.

Compare Mortgage Rates

If they don’t invest themselves, then I would want to ask them, “Have you worked with many people that invest in property?” Because as mortgage brokers, some of them just work with people who are buying their own home.

How To Pick A Mortgage Lender When Buying A House

Some of the mortgage lender folk who work with people who are doing particular investment strategies.

So, some might work with people who invest in positive cash flow property or who invest in rural areas, who invest using developments.

- [Voiceover] What Iwant to do in this video is explain what a mortgage is.

I think most of us have atleast a general sense of it, but even better than that,actually go into the numbers and understand a little bitof what you are actually doing when you're paying amortgage, what it's made up of and how much of it is interest versus how much of it isactually paying down the loan.

Let's just start with a little example.

Let's say that thereis a house that I like.

Let's say that that is the house that I would like to purchase.

It has a price tag of, let's say that I need to pay $500,000 to buy that house.

This is the seller ofthe house right here.

And they have a mustache.

That's the seller of the house.

I would like to buy it.

I would like to buy thehouse.

This is me right here.

And I've been able tosave up $125,000 dollars.

I've been able to save up$125,000 but I would really like to live in that house so I go to a bank.

I go to a bank, let me geta good color for a bank.

That is the bank right there.

And I say, "Mr.

Bank, can you lend me "the rest of the amountI need for that house?" Which is essentially $375,000.

I'm putting 25% down.

This number right here, that is 25% of $500,000.

So I ask the bank, "Can Ihave a loan for the balance? Can I have $375,000 loan?" And the bank says, "Sure.

You seem like a nice guy "with a good job whohas good credit rating.

"I will give you the loan but while you're paying off the loan you can'thave the title of that house.

"We have to have that title of the house "and once you pay off the loan, "we're going to give youthe title of the house.

" What's gonna happen here isthe loan is gonna go to me, so it's $375,000.

$375,000 loan.

Then I can go and buy the house.

I'm gonna give the total $500,000, $500,000 to the seller of the house, and I'll actually moveinto the house myself, assuming I'm using itfor my own residence.

But the title of the house, the document that says who actually owns the house.

This is the home title.

This is the title of the house.

Home title.

It will not go to me.

It will go to the bank.

The home title will go from the seller, or maybe even the seller's bank, because maybe they haven'tpaid off their mortgage.

It will go to the bankthat I'm borrowing from.

This transferring of thetitle to secure a loan.

When I say "secure aloan," I'm saying I need to give something to thelender in case I don't pay back the loan or if I just disappear.

This is the security right here.

That is technically what a mortgage is.

This pledging of the titleas the security for the loan, that's what a mortgage is.

It actually comes from old French.

Mort means dead, andthe gage means pledge.

I'm 100% sure I'm mispronouncing it, but it comes from dead pledge because I'm pledging itnow but that pledge will eventually die once I pay off the loan.

Once I pay off the loan thispledge of the title to the bank will die and it will come back to me.

That's why it's called adead pledge, or a mortgage.

And probably because itcomes from old French is the reason we don't saymort-gage, we say mortgage.

But anyway, this is alittle bit technical, but normally when peoplerefer to a mortgage they're really referringto the loan itself.

They're really referringto the mortgage loan.

What I want to do inthe rest of this video is use a screenshot froma spreadsheet I made to actually show you the math, or actually show you what yourmortgage payment is going to.

You can download thisspreadsheet at khanacademy, khanacademy.

Org/downloads/mortgagecalculator Or actually, even better, justgo to the downloads folder and on your web browseryou'll see a bunch of files, and it will be the filecalled MortgageCalculator, MortgageCalculator.

Xlsx.

It's a Microsoft 2007 format.

Just go to this URL, thenyou'll see all the files there and you can just download this file if you want to play with it.

What it does here, in thiskind of dark brown color, these are the assumptionsthat you can input and then you can change thesecells in your spreadsheet without breaking the whole spreadsheet.

Here I've assumed a 5.

5% interest rate.

I'm buying a $500,000 home.

It's a 25% down payment, that's the $125,000 that I had saved up, that I talked about right over there.

And then the loan amount.

Well, I have 125, I'mgonna have to borrow 375, it calculates it for us.

And then I'm gonna get apretty plain vanilla loan.

This is gonna be a 30 year.

When I say term in years, thisis how long the loan is for.

So 30 years.

It's gonna be a 30 yearfixed-rate mortgage.

Fixed rate, which means theinterest rate won't change.

We'll talk about that a little bit.

This 5.

5% that I'm payingon the money that I borrowed will not change over thecourse of the 30 years.

We will see that the amount I've borrowed changes as I pay down some of the loan.

This little tax rate that I have here, this is to actually figureout what is the tax savings of the interest deduction on my loan.

We'll talk about that in a second, you can ignore it for now.

Then these other thingsthat aren't in brown, you shouldn't mess with these if you actually do open up thespreadsheet yourself.

These are automatically calculated.

This right here is amonthly interest rate.

So it's literally theannual interest rate, 5.

5%, divided by 12.

And most mortgage loans arecompounded on a monthly basis so at the end of every monththey see how much money you owe and they will charge you this much interest on that for the month.

Now given all of these assumptions, there's a little bit ofbehind-the-scenes math, and in a future video Imight actually show you how to calculate what theactual mortgage payment is.

It's actually a prettyinteresting problem.

But for a $500,000 loan--Well, a $500,000 house, a $375,000 loan over 30 yearsat a 5.

5% interest rate, my mortgage payment isgoing to be roughly $2,100.

Right when I bought the house, I want to introduce alittle bit of vocabulary, and we've talked about thisin some of the other videos.

There's a asset in questionright here, it's called a house.

And we're assuming it's worth $500,000.

We're assuming it's worth$500,000.

That is an asset.

It's an asset because itgives you future benefit; The future benefit ofbeing able to live in it.

Now there's a liabilityagainst that asset, that's the mortgage loan.

That's a $375,000 liability.

$375,000 loan or debt.

If this was your balance sheet, if this was all of your assetsand this is all of your debt, and you were essentiallyto sell the assets and pay off the debt, if you sell the house you get the title, you can get the money, thenyou pay it back to the bank.

Well actually, it doesn'tnecessarily go into that order but I won't get too technical.

But if you were to unwindthis transaction immediately after doing it, then youwould have a $500,000 house, you'd pay off your $375,000 in debt, and you would get, inyour pocket, $125,000, which is exactly what youroriginal down payment was.

But this is your equity.

The reason why I'm pointing it out now is, in this video I'm notgonna assume anything about the house price,whether it goes up or down, we're assuming it's constant.

But you could not assume it's constant and play with thespreadsheet a little bit.

But I'm introducing thisbecause as we pay down the debt this number's going to get smaller.

So this number is getting smaller.

Let's say at some pointthis is only 300,000.

Then my equity is going to get bigger.

So you could do equity ishow much value you have after you pay off the debt for your house.

If you were to sell thehouse, pay off the debt, what do you have left over for yourself.

This is the real wealth in thehouse, this is what you own.

Wealth in house, or theactual what the owner has.

What I've done here is-- Actually before I get tothe chart let me actually show you how I calculate the chart.

I do this over the course of30 years, and it goes by month.

So you can imagine that there's actually 360 rows here in the actual spreadsheet, and you'll see that ifyou go and open it up.

But I just want to show you what I did.

On month 0, which I don't showhere, you borrow $375,000.

Now, over the course of that month they're going to charge you.

46% interest.

Remember, that was 5.

5% divided by 12.

46% interest on $375,000 is $1,718.

75.

So I haven't made anymortgage payments yet.

I've borrowed 375,000.

This much interest essentiallygot built up on top of that, it got accrued.

So now before I've paidany of my payments, instead of owing 375,000 atthe end of the first month, I owe $376,718.

Now, I'm a good guy, I'm notgonna default on my mortgage so I make that first mortgage payment that we calculated right over here.

After I make that paymentthen I'm essentially, what's my loan balanceafter making that payment? Well, this was before making the payment, so you subtract the payment from it.

This is my loan balance after the payment.

Now this right here, thelittle asterisk here, this is my equity now.

So remember, I startedwith $125,000 of equity.

After paying one loan balance,after my first payment, I now have $125,410 in equity, so my equity has gone up by exactly $410.

Now you're probably saying,"Gee.

I made a $2,000 payment, "roughly a $2,000 payment, "and my equity only went up by $410 "Shouldn't this debthave gone down by $2,000 "and my equity have gone up by $2,000?" And the answer is no because you had to pay all of this interest.

So at the very beginning, your payment, your $2,000 payment, is mostly interest.

Only $410 of it is principal.

So as your loan balance goes down you're going to pay less interest here, so each of your payments are going to be more weighted towards principal, and less weighted towards interest.

And then to figure out the next line, this interest accrued right here, I took your loan balanceexiting the last month, multiplied that times.

46%.

You get this new interest accrued.

This is your new pre-payment balance.

I pay my mortgage again.

This is my new loan balance.

And notice, already by monthtwo, $2 more went to principal.

and $2 less went to interest.

And over the course of 360months you're going to see that it's an actual, sizable difference, and that's what thischart shows us right here.

This is the interestand principal portions of our mortgage payment.

So this entire heightright here, this is-- Let me scroll down a little bit.

This is by month.

So thisentire height, you notice, this is exactly our mortgagepayment, this $2,129.

Now, on that very first monthyou saw that of my $2,100, only $400 of it, this is the $400.

Only $400 of it went toactually pay down the principal, the actual loan amount.

The rest of it went to pay down interest, the interest for that month.

Most of it went for theinterest of the month.

But as I start paying down the loan, as the loan balance getssmaller and smaller, each of my payments, there'sless interest to pay.

Let me do a better color than that.

There's less interest.

We goout here, this is month 198, over there that last monththere was less interest, so more of my $2,100 actuallygoes to pay off the loan until we get all the way to month 360.

You can see this inthe actual spreadsheet.

At month 360 my final payment is all going to pay off the principal.

Very little, if anything,of that is interest.

Now, the last thing I wantto talk about in this video, without making it too long, is this idea of a interest tax deduction.

A lot of times you'll hearfinancial planners or realtors tell you the benefit of buying your house is it has tax advantages, and it does.

Your interest is tax deductible.

Your interest, not your whole payment.

Your interest is tax deductible.

I want to be very clearwhat deductible means.

First let's talk aboutwhat the interest means.

This whole time over 30 yearsI am paying $2,100 a month, or $2129.

21 a month.

Now the beginning, alot of that is interest.

So on month one, 1,700of that was interest.

That $1,700 is tax deductible.

As we go further and further, each month I get smaller andsmaller tax deductible portion of my actual mortgage payment.

Out here the tax deductionis actually very small, as I'm getting ready topay off my entire mortgage and get the title of my house.

I want to be very clear on this notion of what tax deductible even means, because I think it ismisunderstood very often.

Let's say in one yearI paid, I don't know, I'm gonna make up a number, I didn't calculate it on the spreadsheet.

Let's say in year one Ipay $10,000 in interest.

10,000 in interest.

Remember, my actual paymentswill be higher than that because some of my payments went to actually paying down the loan.

But let's say 10,000 went to interest.

And let's say before this, let's say before thisI was making 100,000, let's put the loan aside.

Let's say I was making $100,000 a year, and let's say I was payingroughly 35% on that 100,000.

I won't go into the whole tax structure and the differentbrackets and all of that.

Let's say if I didn't have this mortgage I would pay 35% taxes, which would be about $35,000in taxes for that year.

This is just a rough estimate.

When you say that $10,000is tax deductible, the interest is tax deductible, that does not mean that I canjust take it from the $35,000 that I would have normallyowed and only pay 25,000.

What it means is I can deductthis amount from my income.

When I tell the IRS howmuch did I make this year, instead of saying I made $100,000,I say that I made $90,000 because I was able to deduct this, not directly from my taxes, I was able to deduct it from my income.

So now if I only made $90,000 -- and this is, I'm doing agross oversimplification of how taxes actually get calculated -- and I pay 35% of that, let'sget the calculator out.

Let's get the calculator.

So 90 times.

35 is equal to 31,500.

So this will be equal to $31,500.

$31,500.

Off of a 10,000 deduction,$10,000 of deductible interest, I essentially saved $3,500.

I did not save $10,000.

Another way to think about it, if I paid 10,000 interestand my tax rate is 35%, I'm gonna save 35% ofthis in actual taxes.

This is what people meanwhen they say deductible.

You're deducting it from the income that you report to the IRS.

If there's something thatyou could take straight from your taxes, that'scalled a tax credit.

If there was some specialthing that you could actually deduct it straight from yourtaxes, that's a tax credit.

But a deduction justtakes it from your income.

On this spreadsheet Ijust want to show you that I actually calculated, in that month, how much of a tax deduction do you get.

So for example, just offof the first month you paid $1,700 in interest of your$2,100 mortgage payment, so 35% of that, and I got 35%as one of your assumptions, 35% of $1,700, I will save$600 in taxes on that month.

So roughly over thecourse of the first year I'm gonna save about $7,000 in taxes, so that's nothing to sneeze at.

Anyway, hopefully you found this helpful and I encourage you togo to that spreadsheet, and play with the assumptions, only the assumptions in this brown color unless you really know whatyou're doing with a spreadsheet, and you can see how thisactually changes based on different interest rates,different loan amounts, different down payments, different terms.

Different tax rates, that will actually change the tax savings, and you can play aroundwith the different types of fixed mortgages on this spreadsheet.

So I would want to find a mortgage broker who either had that experience themselves or who had clients that they had got similar deals for ’cause that way I know that they can negotiate on my behalf and they can get this deal across the line.

What details do Lenders need from me?

It’s one thing to call up a mortgage broker and just to get an estimate of your borrowing capacity but if you’re going through pre-approval and stuff like that, then you’re going to need to provide the mortgage broker with more in-depth details.

Current Home Mortgage Rates

You might need pay slips; you might need proof of identity, all of that sort of stuff.

If you ask them up front, “What details do you need from me?” And when you go to your meeting with them you actually provide them with those details, well that just makes things so much easier.

Top Mistake People Make When Applying for a Mortgage | Home Loan Application Mistakes

Remember, a mortgage lender is only paid once the deal goes through and once you actually get financing.

So the easier you make it for them, the more likely you are going to get better service.

What can I do as a client to make this go as smoothly as possible?

You have the goal of getting financed for your property, the mortgage lender has a goal of you getting financed for your property and no one wants it to be difficult.

And so, if you can ask the mortgage broker, “Look, how can I work with you? How can I make things easy for you?” They’re the experts; they know what they’re doing.

They can tell you exactly what they need and then you can work hard to provide that for them so that they can get everything across the line as quickly as possible.

Usda Guaranteed Loan

You know, I have customers,I deal with customers and even though I’m not a mortgage broker myself, I know that when there’s difficult customers that you don’t want to deal with, it just makes life so much harder and you don’t want to work hard for those people.

And when there’s customers who are really nice to you and who try really hard to help you provide them with the service you provide, you will bend over backwards to do anything you can for those customers to get them across the line, to help them as much as possible.

First Mortgage

So, be one of those customers that the mortgage broker wants to bend over backwards to help you because you have their interest at heart as well.

You want to see them get paid.

You want to see them do an easy mortgage so they get paid easily.

And so you can develop a relationship into the future.

Which lenders can I borrow the most from?

Most people go into a mortgage broker looking for the cheapest interest rate possible.

What is the cheapest interest rate I can get? And the fact of the matter is a mortgage broker is likely to show you the banks that will lend you the amount of money you need and will also have the cheapest interest rate as well.

However, they might not showy ou banks that will lend you more money than you potentially need at the moment.

Now, it’s important to ask, “Which lenders can I borrow the most from?” because this will help you to project into the future.

Maybe you don’t need to know that for this loan right now but maybe, in the future, you might need to borrow money again and you know, or roughly my borrowing capacity is this.

Or if you find out which lenders you can borrow more from, and you find that you can actually borrow an extra $300,000, well you might split up your deposit and invest in two investment properties instead of just one.

And so asking them, “Which lenders can I borrow the most from?” is a great question to ask to really understand your position.

Because, yes, interest rate is important but how much you can borrow is also important as well.

Can I see a full list of my borrowing options?

Most mortgage brokers will provide you with, usually, like a top three or sometimes only a top one.

And I always like to think, “Can I see a full list of my borrowing options?”Again, this is less to say you want to go through all of this in minute detail and see.

You’re probably going to still choose from one of the top three ones.

But you just want to see that they’re giving you the full amount of information.

And most mortgage brokers are good people but there are some dodgy mortgage brokers out there who are just trying to get the deal that gives them the biggest commission.

Private Mortgage Lenders

And so by asking to see a full list of what your borrowing options, you can then look at that and you can then assess, “Okay, well which loan do I think is going to be best for me?” rather than just taking the recommendation of the mortgage broker who may or may not be thinking about themselves.

Usda Guaranteed Loan

So, again, most mortgage brokers are great people out there to help you but it’s always a good idea to get a full list of your borrowing options that are available.

Will this put a mark against my credit file?

And so this is when you’re trying to work out how much you’re going to borrow and stuff like that.

When you go into a bank and you try and find out how much you can borrow, often, the bank will do a credit check and this puts a mark against your credit file.

And what happens is if you have a lot of these marks against your credit file, even though it’s nothing bad, this can actually stop you getting a loan.

Online Mortgage

So, talk to your mortgage broker and when you’re looking at, “What can I borrow?”or your looking at getting pre-approval, just understand, “Will this put a mark against my credit file?” ‘Cause it’s not bad to have a couple or whatever.

But if you’re getting lots and lots of marks against your credit file, then that could be an issue.

So just make sure and you know when a mark’s being put against your credit file and when a mark isn’t being put against your credit file.

How soon can I revalue or borrow again?

So if you’re investing in a property to renovate it or to develop it or even if you’re investing in a property that’s potentially under market value, you want to know how quickly can you revalue that property so you can get equity and then hopefully draw equity out of the property to go ahead and invest again.

There are a lot of lenders out there who don’t allow you to revalue within a 12-month period.

So, speak to your mortgage broker about the lenders that will allow you to revalue faster.

And basically, this will give you an idea of how quickly you can revalue to consider going again.

Subprime Mortgage

You’re also going to want to ask them, “After I invest in this property, how soon can I borrow again or what do I need to do to put myself in a position to be able to borrow again and to purchase the next property?”

Because hopefully, your goal isn’t just to purchase one property but to grow your property portfolio and to achieve that financial freedom and that financial security that you’re striving for.

Will My Loans be ‘cross-collateralised’?

Now, I have heard a lot of stories about investors whose loans have been cross-collateralised and it’s cause major problems when they’ve gone and sold their property because the bank shave been able to take that money and pay off debt.

First Home Mortgage

And basically, you want to avoid this at all costs from what I hear.

And so, it’s good to ask your mortgage broker, “Will my loans be cross-collateralised in any way?” Generally going with the same lender for two loans does it by default, even though it doesn’t say they’re cross-collateralised.

So, it’s just something that you want to look at the fine print, you want to understand, “Are these cross-collateralised?” And if they are, try and avoid it, try and get loans that aren’t going to be cross-collateralised.

Private Mortgage Insurance

So there you have some questions to ask your mortgage broker next time you go and see a broker to find out how much you can borrow or get pre-approval or get financed for another property.

If you are in the market, looking at properties and you want to see some high rental yield properties, then I’ve got 10 property listings that I’ve gone out and found for you guys.

You can see what high rental yield properties look like that are likely to generate a positive cash flow.

Did You Know – You Can Get Pre-Approved for a USDA Loan in Glen Cove?

Refinance House

- [Voiceover] What Iwant to do in this video is explain what a mortgage is.

I think most of us have atleast a general sense of it, but even better than that,actually go into the numbers and understand a little bitof what you are actually doing when you're paying amortgage, what it's made up of and how much of it is interest versus how much of it isactually paying down the loan.

Let's just start with a little example.

Let's say that thereis a house that I like.

Let's say that that is the house that I would like to purchase.

It has a price tag of, let's say that I need to pay $500,000 to buy that house.

This is the seller ofthe house right here.

And they have a mustache.

That's the seller of the house.

I would like to buy it.

I would like to buy thehouse.

This is me right here.

And I've been able tosave up $125,000 dollars.

I've been able to save up$125,000 but I would really like to live in that house so I go to a bank.

I go to a bank, let me geta good color for a bank.

That is the bank right there.

And I say, "Mr.

Bank, can you lend me "the rest of the amountI need for that house?" Which is essentially $375,000.

I'm putting 25% down.

This number right here, that is 25% of $500,000.

So I ask the bank, "Can Ihave a loan for the balance? Can I have $375,000 loan?" And the bank says, "Sure.

You seem like a nice guy "with a good job whohas good credit rating.

"I will give you the loan but while you're paying off the loan you can'thave the title of that house.

"We have to have that title of the house "and once you pay off the loan, "we're going to give youthe title of the house.

" What's gonna happen here isthe loan is gonna go to me, so it's $375,000.

$375,000 loan.

Then I can go and buy the house.

I'm gonna give the total $500,000, $500,000 to the seller of the house, and I'll actually moveinto the house myself, assuming I'm using itfor my own residence.

But the title of the house, the document that says who actually owns the house.

This is the home title.

This is the title of the house.

Home title.

It will not go to me.

It will go to the bank.

The home title will go from the seller, or maybe even the seller's bank, because maybe they haven'tpaid off their mortgage.

It will go to the bankthat I'm borrowing from.

This transferring of thetitle to secure a loan.

When I say "secure aloan," I'm saying I need to give something to thelender in case I don't pay back the loan or if I just disappear.

This is the security right here.

That is technically what a mortgage is.

This pledging of the titleas the security for the loan, that's what a mortgage is.

It actually comes from old French.

Mort means dead, andthe gage means pledge.

I'm 100% sure I'm mispronouncing it, but it comes from dead pledge because I'm pledging itnow but that pledge will eventually die once I pay off the loan.

Once I pay off the loan thispledge of the title to the bank will die and it will come back to me.

That's why it's called adead pledge, or a mortgage.

And probably because itcomes from old French is the reason we don't saymort-gage, we say mortgage.

But anyway, this is alittle bit technical, but normally when peoplerefer to a mortgage they're really referringto the loan itself.

They're really referringto the mortgage loan.

What I want to do inthe rest of this video is use a screenshot froma spreadsheet I made to actually show you the math, or actually show you what yourmortgage payment is going to.

You can download thisspreadsheet at khanacademy, khanacademy.

Org/downloads/mortgagecalculator Or actually, even better, justgo to the downloads folder and on your web browseryou'll see a bunch of files, and it will be the filecalled MortgageCalculator, MortgageCalculator.

Xlsx.

It's a Microsoft 2007 format.

Just go to this URL, thenyou'll see all the files there and you can just download this file if you want to play with it.

What it does here, in thiskind of dark brown color, these are the assumptionsthat you can input and then you can change thesecells in your spreadsheet without breaking the whole spreadsheet.

Here I've assumed a 5.

5% interest rate.

I'm buying a $500,000 home.

It's a 25% down payment, that's the $125,000 that I had saved up, that I talked about right over there.

And then the loan amount.

Well, I have 125, I'mgonna have to borrow 375, it calculates it for us.

And then I'm gonna get apretty plain vanilla loan.

This is gonna be a 30 year.

When I say term in years, thisis how long the loan is for.

So 30 years.

It's gonna be a 30 yearfixed-rate mortgage.

Fixed rate, which means theinterest rate won't change.

We'll talk about that a little bit.

This 5.

5% that I'm payingon the money that I borrowed will not change over thecourse of the 30 years.

We will see that the amount I've borrowed changes as I pay down some of the loan.

This little tax rate that I have here, this is to actually figureout what is the tax savings of the interest deduction on my loan.

We'll talk about that in a second, you can ignore it for now.

Then these other thingsthat aren't in brown, you shouldn't mess with these if you actually do open up thespreadsheet yourself.

These are automatically calculated.

This right here is amonthly interest rate.

So it's literally theannual interest rate, 5.

5%, divided by 12.

And most mortgage loans arecompounded on a monthly basis so at the end of every monththey see how much money you owe and they will charge you this much interest on that for the month.

Now given all of these assumptions, there's a little bit ofbehind-the-scenes math, and in a future video Imight actually show you how to calculate what theactual mortgage payment is.

It's actually a prettyinteresting problem.

But for a $500,000 loan--Well, a $500,000 house, a $375,000 loan over 30 yearsat a 5.

5% interest rate, my mortgage payment isgoing to be roughly $2,100.

Right when I bought the house, I want to introduce alittle bit of vocabulary, and we've talked about thisin some of the other videos.

There's a asset in questionright here, it's called a house.

And we're assuming it's worth $500,000.

We're assuming it's worth$500,000.

That is an asset.

It's an asset because itgives you future benefit; The future benefit ofbeing able to live in it.

Now there's a liabilityagainst that asset, that's the mortgage loan.

That's a $375,000 liability.

$375,000 loan or debt.

If this was your balance sheet, if this was all of your assetsand this is all of your debt, and you were essentiallyto sell the assets and pay off the debt, if you sell the house you get the title, you can get the money, thenyou pay it back to the bank.

Well actually, it doesn'tnecessarily go into that order but I won't get too technical.

But if you were to unwindthis transaction immediately after doing it, then youwould have a $500,000 house, you'd pay off your $375,000 in debt, and you would get, inyour pocket, $125,000, which is exactly what youroriginal down payment was.

But this is your equity.

The reason why I'm pointing it out now is, in this video I'm notgonna assume anything about the house price,whether it goes up or down, we're assuming it's constant.

But you could not assume it's constant and play with thespreadsheet a little bit.

But I'm introducing thisbecause as we pay down the debt this number's going to get smaller.

So this number is getting smaller.

Let's say at some pointthis is only 300,000.

Then my equity is going to get bigger.

So you could do equity ishow much value you have after you pay off the debt for your house.

If you were to sell thehouse, pay off the debt, what do you have left over for yourself.

This is the real wealth in thehouse, this is what you own.

Wealth in house, or theactual what the owner has.

What I've done here is-- Actually before I get tothe chart let me actually show you how I calculate the chart.

I do this over the course of30 years, and it goes by month.

So you can imagine that there's actually 360 rows here in the actual spreadsheet, and you'll see that ifyou go and open it up.

But I just want to show you what I did.

On month 0, which I don't showhere, you borrow $375,000.

Now, over the course of that month they're going to charge you.

46% interest.

Remember, that was 5.

5% divided by 12.

46% interest on $375,000 is $1,718.

75.

So I haven't made anymortgage payments yet.

I've borrowed 375,000.

This much interest essentiallygot built up on top of that, it got accrued.

So now before I've paidany of my payments, instead of owing 375,000 atthe end of the first month, I owe $376,718.

Now, I'm a good guy, I'm notgonna default on my mortgage so I make that first mortgage payment that we calculated right over here.

After I make that paymentthen I'm essentially, what's my loan balanceafter making that payment? Well, this was before making the payment, so you subtract the payment from it.

This is my loan balance after the payment.

Now this right here, thelittle asterisk here, this is my equity now.

So remember, I startedwith $125,000 of equity.

After paying one loan balance,after my first payment, I now have $125,410 in equity, so my equity has gone up by exactly $410.

Now you're probably saying,"Gee.

I made a $2,000 payment, "roughly a $2,000 payment, "and my equity only went up by $410 "Shouldn't this debthave gone down by $2,000 "and my equity have gone up by $2,000?" And the answer is no because you had to pay all of this interest.

So at the very beginning, your payment, your $2,000 payment, is mostly interest.

Only $410 of it is principal.

So as your loan balance goes down you're going to pay less interest here, so each of your payments are going to be more weighted towards principal, and less weighted towards interest.

And then to figure out the next line, this interest accrued right here, I took your loan balanceexiting the last month, multiplied that times.

46%.

You get this new interest accrued.

This is your new pre-payment balance.

I pay my mortgage again.

This is my new loan balance.

And notice, already by monthtwo, $2 more went to principal.

and $2 less went to interest.

And over the course of 360months you're going to see that it's an actual, sizable difference, and that's what thischart shows us right here.

This is the interestand principal portions of our mortgage payment.

So this entire heightright here, this is-- Let me scroll down a little bit.

This is by month.

So thisentire height, you notice, this is exactly our mortgagepayment, this $2,129.

Now, on that very first monthyou saw that of my $2,100, only $400 of it, this is the $400.

Only $400 of it went toactually pay down the principal, the actual loan amount.

The rest of it went to pay down interest, the interest for that month.

Most of it went for theinterest of the month.

But as I start paying down the loan, as the loan balance getssmaller and smaller, each of my payments, there'sless interest to pay.

Let me do a better color than that.

There's less interest.

We goout here, this is month 198, over there that last monththere was less interest, so more of my $2,100 actuallygoes to pay off the loan until we get all the way to month 360.

You can see this inthe actual spreadsheet.

At month 360 my final payment is all going to pay off the principal.

Very little, if anything,of that is interest.

Now, the last thing I wantto talk about in this video, without making it too long, is this idea of a interest tax deduction.

A lot of times you'll hearfinancial planners or realtors tell you the benefit of buying your house is it has tax advantages, and it does.

Your interest is tax deductible.

Your interest, not your whole payment.

Your interest is tax deductible.

I want to be very clearwhat deductible means.

First let's talk aboutwhat the interest means.

This whole time over 30 yearsI am paying $2,100 a month, or $2129.

21 a month.

Now the beginning, alot of that is interest.

So on month one, 1,700of that was interest.

That $1,700 is tax deductible.

As we go further and further, each month I get smaller andsmaller tax deductible portion of my actual mortgage payment.

Out here the tax deductionis actually very small, as I'm getting ready topay off my entire mortgage and get the title of my house.

I want to be very clear on this notion of what tax deductible even means, because I think it ismisunderstood very often.

Let's say in one yearI paid, I don't know, I'm gonna make up a number, I didn't calculate it on the spreadsheet.

Let's say in year one Ipay $10,000 in interest.

10,000 in interest.

Remember, my actual paymentswill be higher than that because some of my payments went to actually paying down the loan.

But let's say 10,000 went to interest.

And let's say before this, let's say before thisI was making 100,000, let's put the loan aside.

Let's say I was making $100,000 a year, and let's say I was payingroughly 35% on that 100,000.

I won't go into the whole tax structure and the differentbrackets and all of that.

Let's say if I didn't have this mortgage I would pay 35% taxes, which would be about $35,000in taxes for that year.

This is just a rough estimate.

When you say that $10,000is tax deductible, the interest is tax deductible, that does not mean that I canjust take it from the $35,000 that I would have normallyowed and only pay 25,000.

What it means is I can deductthis amount from my income.

When I tell the IRS howmuch did I make this year, instead of saying I made $100,000,I say that I made $90,000 because I was able to deduct this, not directly from my taxes, I was able to deduct it from my income.

So now if I only made $90,000 -- and this is, I'm doing agross oversimplification of how taxes actually get calculated -- and I pay 35% of that, let'sget the calculator out.

Let's get the calculator.

So 90 times.

35 is equal to 31,500.

So this will be equal to $31,500.

$31,500.

Off of a 10,000 deduction,$10,000 of deductible interest, I essentially saved $3,500.

I did not save $10,000.

Another way to think about it, if I paid 10,000 interestand my tax rate is 35%, I'm gonna save 35% ofthis in actual taxes.

This is what people meanwhen they say deductible.

You're deducting it from the income that you report to the IRS.

If there's something thatyou could take straight from your taxes, that'scalled a tax credit.

If there was some specialthing that you could actually deduct it straight from yourtaxes, that's a tax credit.

But a deduction justtakes it from your income.

On this spreadsheet Ijust want to show you that I actually calculated, in that month, how much of a tax deduction do you get.

So for example, just offof the first month you paid $1,700 in interest of your$2,100 mortgage payment, so 35% of that, and I got 35%as one of your assumptions, 35% of $1,700, I will save$600 in taxes on that month.

So roughly over thecourse of the first year I'm gonna save about $7,000 in taxes, so that's nothing to sneeze at.

Anyway, hopefully you found this helpful and I encourage you togo to that spreadsheet, and play with the assumptions, only the assumptions in this brown color unless you really know whatyou're doing with a spreadsheet, and you can see how thisactually changes based on different interest rates,different loan amounts, different down payments, different terms.

Different tax rates, that will actually change the tax savings, and you can play aroundwith the different types of fixed mortgages on this spreadsheet.

First Time Home Buyer BEST MORTGAGE DEALS When Buying a House | First Time Home Buyer Loan Programs

Refi

Hi everyone this is your Tampa Bay RealtorLance Mohr.

In this video I want to talk about how tochoose a mortgage lender and that I'm going more specifically go over mortgage brokersversus banks versus credit unions.

Tell you the difference between those.

Tell you the pros.

Tell you the cons and then we're going togo over a little bit about what questions you need to ask the lender to make sure youget a really good mortgage lender for you.

So let me start off talking about differenttypes of institutions where you could get home loans.

Through a lot of times when people think aboutbuying a home they think.

Hey, let me just give my local bank.

Bank of America, Wells Fargo a caller whenthey give my credit union their call or what's the whole thing with mortgage brokers? What's a mortgage broker? How does that work? What's the difference between a mortgage brokerand a bank? The difference between that and a credit union.

So I'm going to go over all this.

Let me first start off with credit unionsand you know I'm just going to give you how I see it because I've been in this industryfor over 20 years prior to being in real estate as an agent.

My prior life was a mortgage banker and that'swhat I did for a number of years.

I'm going to give you things how I see.

I'm not a big fan of the credit union.

I think credit unions are great.

They do car loans that you do checking savingsCDs much like a bank.

They have really really good customer service.

They really care about their members and Ithink that's great.

The problem is I don't really think the trainingthere and I'm a person that really really believes in knowledge.

You know I'm not saying that if you work witha credit union or you know someone works with the credit union in or go through a creditunion.

Not saying this about all credit unions.

I'm using this in a general sense.

They just don't have the best training inthe world.

The other problem with credit unions is thepeople who are doing the loans.

The loan offices the credit union a lot ofthem are strict salary.

If they're not strict salary, their salaryplus bonuses and I'll get to this in a little bit later.

So that's why I'm not really a big fan.

Years ago when I used to be in mortgage banking.

I actually used to go to credit unions.

They were some of my clients to get loansfrom because they didn't have all the knowledge and they were telling people they weren'tqualified because they could not work with them.

Now the good thing about credit unions becausethey are so customer service oriented they would pick up the telephone and say hey Lancewe can't do this loan can you do it? So at least they're going to do that.

Banks? Nope, they're not like that.

This is one of the things with banks.

Banks have a lot of a lot of good advantages.

As a matter of fact, if you're going to beusing bond money.

You're probably going to be using banks.

If you need construction loans you're probablygoing to be using banks but banks like credit unions.

They're a jack of all trades.

They're not a master of one.

They're doing the checking, they're doingsavings, they're doing CDs, they're doing car loans, boat loans you name it.

They're doing anything and everything andwhen you tend to go to the loan officers and a lot of banks not all of them.

So again you know if you work with a bankdon't get mad but I know a lot of people that have worked for banks and what happens isyou they get what's called the foot traffic.

They're not going out there hitting the pavementevery day.

A lot of the loan officers where the banksare just sitting in the bank and just waiting for the business to come to them.

They're not going out.

It's sort of like I always look at our industry.

Are you have the lion and you have the gazelle.

Oh, there are a lot of lions with banks butmost of them are gazelles.

They're sitting back.

Again banks pretty much most of the loan officersare on a salary plus a Bonus.

So you know they're not straight commission.

That's one of the things.

Now when it comes to banks again there aretheir pros.

When it comes to banks you have to understandthat they're only one when lending their money.

This could be a problem if you go in and maybefigure on an FHA loan and maybe that's not really very good in their wheelhouse.

They might tell you well you're not qualifiedfor a loan.

They're not going to say well you could probablyget a loan but you just can't get one through us that's the problem because you're onlyusing their money.

If you're a square peg and they have a roundhole you're going to have a hard time fitting in that and that's the unfortunate thing.

You know there's a lot of fallout.

There’s a lot of people banks tend to wantthe cream of the crop buyers.

If you're walking in with 750 credit scores.

Putting down 20% your salary and employeegreat but what happens if you don't fit into that? You may be working with a bank.

You may not know the thing about banks isthey're generally a little higher on the interest rates than say a mortgage broker but they'rea little bit what lower on closing costs because everybody's in-house and that's the nice thingabout banks is their in-house.

Now I will say this if you are going to usea bank.

If you’re going to use a credit union, ifyou are going to use a mortgage broker get someone local don't go with Wells Fargo andgo to some 800 number or you walk into Bank of America and they say oh let me give youthis 800 number Des Moines Iowa and you're what I am in Tampa or somewhere else.

You want someone local.

Out of sight out of mind.

You want someone if things aren't going yourway you could go in there and pound on their desk and say what the heck's going on.

So just keep that in mind but you know themgenerally everybody's in a localized area.

You'll have your underwriter there.

You have your processor there.

They do have some programs that they havea little bit more flexibility on because they could just decide not to sell that but theymight keep it they might keep it in their portfolio but generally speaking the mainthing I would probably rather choose and I'll get into mortgage brokers in just a littlebit.

Why I tend to like mortgage brokers betterbecause a bank their loan officer is getting paid usually a salary plus a bonus.

That’s the opposite.

So, now let’s talk about mortgage brokers.

Mortgage brokers they're basically prettymuch all of them out there.

It's sink or swim.

They don't get paid unless they find a wayto say yes.

So if you walk in like when I was in mortgagebanking and brokering.

If you walked in and I'm with the broker andyou were on an FHA loan program I'm probably going to have one lender for that.

That it's going to be really really focusedon FHA.

If you're VA you're probably going over tothis later.

If you're on maybe a conventional in a fightfor sit down you're over here.

If it's a 20% down you're over here.

If it's a jumbo it's this linker if you goin and maybe you have low credit scores you're over with this lender right here.

So they don't have just their money.

They have everybody's money now.

I know you go into these brokers and they'relike, we have 50 lenders.

Let’s face it most mortgage brokers willonly use two or three.

They'll probably have five to seven at anyone time but they are very efficient because this is all they do and they don't get paidand unless they find a way to say yes that's why I sort of break it up.

Is there are the lions and there are the gazellesand I would have rather have someone that is on a straight hundred percent commission.

That if they don't find a way to say yes theydon't get paid.

That's a huge motivator.

So there is the thing with a little bit differentlike the banks.

Keep in mind brokers broker out so they'regoing to broker out to a bank.

They could even be broken out to the samebank you're getting the quote from.

It's pretty rare but it could happen but they'regoing to have usually a little bit more costly because they're going to have the underwriterin-house and I mean in-house but they're going to charge for that.

They're going to have the processor that therebeen a charge for that.

So they're going to have a little bit morecost but they get their pricing and wholesale pricing not retail like a bank.

It’s usually going to equal out so there'sand if you're looking at going with bond money you pretty much never going to go with a brokerif you're looking to get in a construction loan.

You're probably not going to go with the brokerbut again it's all about choosing the right broker.

It's all about choosing the right loan officerand you know that's what you need to do.

You need to choose the right person.

So I did a video if you want to know how toget the best interest rate I'll put it up above.

You could look at it but let's go over whatyou really need to do when it comes to choosing a loan officer.

You want to always start off with your realestate agent.

First know maybe you could get a recommendationfrom your real estate agent you could get a recommendation from friends, co-workersbut dig a little deeper.

Don't just get that recommendation.

Ask enough to say why you think this loanofficer is so good.

Why are you referring me to this person? What is it about them that makes them so good? You can also go and take a look at sites likeYelp.

Go to their LinkedIn page check their website.

Read up on them but overall loan officersare horrible at marketing so don't hold that against them.

I know when I was a loan officer I wasn'tthe best marketer in the world.

So you know you definitely want to dig a littledeeper and ask him and then when you're talking to them just like an interview in a real estateagent.

You need to ask them two questions at least.

These two questions why should I work foryou and why should I work for your company? Basically, let them tell you what makes themgood.

Let them tell you why you should be workingwith them.

If they don't have an answer to those questionsyou really have to wonder but you know you definitely talk to your real estate agent.

That's a good source and just make sure theloan officer knows what they're doing.

Yeah I mean feel free to ask them what trainingyou have.

I mean I never got this when I was in a loanoffice.

When I was one officer but I had no problemI don't have it when people ask me.

This is a real estate agent if they're interviewingme or asking about my experience or how long I've been in the business or why they shouldwork with me or what makes my company good.

It's not as important as a realtor but whatthe loan officer it's everything if you go into the better business bureau and they don'thave a good rating.

You really have to wonder if that someonewho you want to work with.

So do these and you're going to be good togo but definitely pick loan officer at the end of the day get someone that you trustto get someone that you know is knowledgeable.

Who's been in the business that you feel hasthe proper training because one thing I discuss in my video? How to get a really good interest rate isit's more about the loan program.

If you're in the wrong loan program the interestrate doesn't matter and if you choose a loan officer that doesn't understand differentloan programs and they put you in the wrong one program.

You could have a great interest rate thatone program but it may not be the greatest interest rate you could get or you need.

If you like these videos give me a thumbs-up.

If you want to subscribe to my channel hitthe subscribe button hit the belly button and you'll get notified of my new videos.

I wish you all the best of luck.

If you're looking for a realtor in Tampa BayI would love to help you.

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