This Mortgage Is Scary! (Part 1)
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- Опубліковано 27 сер 2024
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Dont all mortgages have to be repaid when you sell your house? Otherwise banks are losing a lot of money.
Banks can foreclose a home, which means they pass off the mortgage to the next buyer. The catch on their end is that they can't re-sell the home for more than what's owed on the mortgage.
Granted, this only happens when a home is repossessed because someone couldn't make payments anymore. I am pretty sure the seller could sell the house and use that to pay the rest of the mortgage so the bank still gets their money.
@@timothywalters23 Don't you mean, you can't sell for less. If you sell more than the seller profits. The second is interest free(up to $15k)
@@kimberlymartin459 I'm talking about a bank reselling a house that has been repossessed and is therefore in foreclosure.
If we are talking specifically about what's said in this short, then yes, that applies to the individual.
@@timothywalters23 you're right. Banks can't profit. But at an auction the home can sell for more. The bank just have to give the overage to the prior owner.
Reality, banks don't want the homes back. They're not in the real estate business they're in the lending department. They will only take back if the owner defaults on the loan. Other words their intentions are to make money off of the money from consumers , lend it out to a potential buyer and earn from the interest.
If they have to keep foreclosure on homes they're not making any money....they're just collecting what was not paid before the defaults... nothing more and sometimes less. Homes are just sitting on the lender books and not earning them anything.
You pay the remaining mortgage with the selling price but here you have to have it cleared out
You have to pay off ANY mortgage when you sell your home.
Listen to what she's actually saying 🤦♂️
Most down payment assistance programs are this way. Why are you shocked? You are financial pros? The assistance is a second lien and yes has to be repaid one way or another. This is not new FYI
In 2005 my wife purchased a home 80% first mortgage, 10% second mortgage, 10% down payment. She had to pay PMI until the second motrgage was paid off. It cost more than 20% down but she had purchased rather then renting.
Side note, 2008 the house lost 20% value but we were still able to pay the mortgage so no big deal. Today its worth 25% more then she paid.
Your house is only worth 25% more than it was in 2005? That is terrible. Do you live somewhere where everyone is leaving and no one new is moving in?
My house has trippled in value since I bought in early 2009. We're talking 250% - 300%!
They make this sound more complicated than it is.... Basically what they're offering is your 3% down payment; can be financed if you don't have enough to put down. That way you can get into a home without the restriction of having a large down payment
And that’s exactly what a lot of FHA loans do anyways. They are definitely making this sound worse than it Is. 0% interest make this better than all FHA loans
Gasp!! Billionaire dun dun dun
Gasp!! Secondary mortgage dun dun dun
Gasp!! Interest-free down-payment loan BUT, BUUUUUT, it has to be paid in full if you sell dun dun dun
I swear they don't even comprehend what they read. Low IQ 🤦♂️
This is known as a piggyback mortgage and it allowed my wife and I to get into our first home. We refinanced soon after and lowered our rate and combined into a single mortgage and were able to drop PMI because we now had an 80% LTV. While I know you don't recommend buying with anything but 20% down, it's not always possible to have a choice if rents are hard to come by and home choices are scarce.
When we bought our first home, this was called a Split Second. We did the same as you just a few years later.
Am I missing something here?
She said there was no interest on this type of mortgage. But you said you had interest on yours?
That's just like all mortgages. A prison that you pay to live in.
You're welcome to become homeless. 🙂
Well then I have a very affordable and nice prison in a very safe neighborhood. You think a home is a prison? Try the street and tell me how you enjoy that.
@James-yi1vk The home isn't the prison. The mortgage is the prison. I built a house from reclaimed materials and paid cash for everything I had to, and now I live mortgage-free. I have no need of your prison or the streets. I did this making less than 30k/year. I just finished it last fall.
@@josephbarker91 And where is this castle you’ve built?
@@lllmmm3572 I didn't say it was a castle; I said it was a house.
Wait, what am I not understanding. When you sell a house with a balance on a mortgage. That balance gets paid. Maybe they mean balance + interest has to be paid? I don't get it?
The audacity to make you pay off a 0 interest loan when you sell is unreal!
Why is this bad? You have to repay all mortgages when you sell your house usually.
You apparently didn't pay attention to what she said towards the latter 33% of this video.. when one of those two stipulations completes you have to pay the remaining full amount up front in one payment balance of the other mortgage, not in monthly payments. That's the difference that's the gets gotcha that's the scam.
Seriously it's not rocket science to understand this
@@motoryzenI can appreciate you explaining this, but there's no real need to be snarky about it. There will always be people who don't understand something that seems simple to you. The original comment wasn't being rude. If you're gonna educate, just do it. No need to be condescending.
@@Mykeynikey22331 snarky? Look kid I'm not here to cater to your little woke feelings okay. Had you actually listened to the video and you can replay it as many times as you want infinitely by the way, you would have already known the answer that I pointed out
Getting butt hurt over facts is asinine as a 4-year-old thinking she knows more than a grown man from experience. Get real
@@Mykeynikey22331 I'm not here to be your therapist okay. If you get butthurt over facts involving and easily preventable mistakes such as watching a short video twice or three times and actually listening and paying attention to it and even pausing it at certain points and rewinding then my comment wouldn't have been needed . I'm not saying you versus Svetlana in this comment section I'm just stating the word you in general. We all have brain farts it happens but getting butt hurt over the fact that someone pointed out hey all you got to do is pay attention and listen to the video you can always rewind it and re-watch as many times as you need, is a sign of immaturity
That's not my problem and not my fault that's all you
@@motoryzenyou are being an ass.
Sounds fine to me. It's literally 0% financing. Sure, it would be better to hear that they encourage borrowers to pay a standing order into a 'savings' (escrow) account as part of their financing to help plan for the eventual repayment, but this sounds completely fine, especially for first-time buyers.
it is no different than any other 0% down mortgage, it just runs contrary to Ramsey philosophy. if their objection is that it's a bad idea becuase it's poor risk management and it encourages paying too much for your housing,
Isn’t this the requirement of all mortgages: that the mortgage repaid when the property is sold or financed? It seems like the billionaire is doing a huge favor and helping a whole Lotta people by not charging interest.
I am for whatever reason either misunderstanding you or this is fear mongering.
How is it fear mongering?
This show is super anti debt, and their concern is that if something comes up and you need to sell, refinance, whatever, and you can't cover the 3% you will be in a pickle.
@@Moollenthe issue is you should never sell your house and they ritualistically say you can sell to pay off debt. Houses are assets that appreciate just like the stock market. They shouldn’t be sold off to pay debt. This really shouldn’t scare anyone, as it’s literally a mortgage, you just have a secondary loan as well that comes with it.
@brettgordon9697 if your house is outside of your means you should sell it.
@@brettgordon9697houses dont appreciate in every market at least not all the time especially after large upswings like we have had recently in the US. In some other countries houses depreciate. A 100% loan will effectively be worth less than the loan value for around 2 years even in typical appreciation due to selling costs.
A second mortgage with zero percent rate that you pay off at the end is exactly what a partial claim is, and that is a pretty standard option for people who are in default to help catch them up on their mortgage.
It’s good to see everyone in the comments asking the same question. This sounds better than all FHA loans. I had two mortgages on my FHA loan as well and is just fine. This sounds better than what I started with so I don’t see what the bad part is
0% down, 0% interest mortgages, please expand into the UK, I'll gladly sign up.
1). All mortgages have to be paid when you sell the house. You pay off the loan they approved you for on your house. That’s how the title is transferred.
2) if you don’t have a 20% down payment you have to pay mortgage insurance. This is an extra fee until you have paid 20% of the mortgage.
So you pay the mortgage insurance or you get a second mortgage to pay the 20%. Either way the banks get their money.
The real issue is that people can get into a home who can't even save $15k. That means these homes are likely to go into default since the homeowner will have zero equity. Same thing happened during the 2008 crash.
Agreed. The real exposure is financing marginally qualified buyers, which could lead to increased defaulted loans.
I'm sorry but if you sell your house are you not still liable to pay the loan off? Like I'm sorry but this seems like nothing different.
Did someone say 2008?
That's exactly what they were doing then. I was young and fell for it. 😢
That's why I hate the term homeowner. Im $230k in debt on the house Im paying the bank back for, it's mine on paper but not if I don't make every payment for 30 years
That’s a very common occurrence. Many states host similar programs. Usually called first time buyer assistance or the like
That billionaire is building mansion about 1/2 mile from me. He tore down 5 houses in a very expensive neighborhood to build his estate. It will be the largest residence in the state of Michigan. He also owns the Phoenix Suns and he played basketball for MSU. His Dad started the company buy he has taken it to a while other level.
As someone who handled mortgage acquisition data conversion at the height of the last crash, this is trouble. Big trouble.
Don't buy into these pools or MBS's.
Only if the ability to pay the full mortgage amount is not verified. I've seen this work well before. And, I've had multiple 1st and 2nd mortgages as well as commercial financing for my properties.
This makes no sense ..every mortgage has to be paid off with refi or when sold, everything is paid off first when you sell before you get any money back.
We bought our home in 2009 and used 80/15/5 mortgage. We had enough money for down payment but I didn't want to. First mortgage was 80%, second mortgage was 15% and 5%cash. Nothing wrong with that if you can afford it. I preferred to have more cash on hand. Paid second mortgage early, refinanced the main mortgage and paid the house off in 11 years. Don't live above your means and you'll be fine
What are you talking about? You're moving into a home with zero down. Maybe pay closing cost. But why are you saying this is negative? It's no interest according to what you said. So where's the negative? They are giving people an opportunity. It's not a prison!! It's an opportunity for people who qualify. If you have something better then say it. Renting is prison!! You're at the mercy of the landlord. Whatever is his idea of rents should be. 😮😮😮
Like with any mortgage the very real possibility of the property losing value would put them underwater if the value is down at the time of sale. The 0 percent sounds great, but how do they stay in business if they only collect principle and no interest.😮
This sounds like a good idea till it isn't but it seems to help people get into homes faster people are going to go for it until it has problems. I'm going to sit in time out because this reminds me of 2008 or maybe I'm missing something here I'm not sure.
3% with a Max 15000 means it can only be used on homes up to 500,000. Seems like a setup for another crash has people walk away if the economy goes south
no, its not a tiny prison anymore than the mortgage is, but the no equity means you're really shorting your housing. its interest free non dischargeable downpayment assistance. its not hand cuffs anymore than getting a regular mortgage. its just a terrible risk position to take on.
Seems like the risk is less. There's $0 down.
@@mikechaffee4331 the risk is that for an individual who hasn't saved a down payment is unlikely to be able to weather a sustained negative equity position because they don't earn a great deal and need the down payment assistance. compound that with the potentially more precarious work lower income earners tend to face, the risk of being saddled with a debt they can't pay is where the higher risk comes into it.
Homes appreciate 99% of the time, so the longer you’re on the deeds and if you keep making those payments, you’ll get there. Unless the place is falling down, it’s going to go up in value over time, making re-sale less painful 👍🏼👍🏼….
This sounds like a down payment assistance program. It is not unheard of, I was able to get into my first house with a program like this, thankfully I was able to make it work. The only issue I had was I was told (and given in writing) that I could refinance my mortgage and I would not need to pay back the down payment if it was a lower rate. I was able to refinance at a lower rate but the lending institution I went through said that it needed to pay off the down payment first, luckily I had some money set aside and was able to do it and the only reason I did was that I save the down payment plus a fair bit more in interest cost.
There is literally no downside since the secondary loan is interest free (if I understood correctly)….
Geeez, didn't many go through this leading to the 2007-2008 housing down turn.
I’m so confused why it’s bad
So say they buy a home for 400,000
They have to be qualified to show they can make repayments
They provide 3% down so $12,000 at 0% interest
They also provide 97% at say standard market rate for the remaining $388,000
The condition is they have to repay the mortgage in full at time of refinance or sale, or I’m assuming they have to carry the debt themselves for the remaining balance?
(Which is identical to every other mortgage)
Is there something I’m missing ?
So we have gotten to the point where like student loans, people don’t want to pay back their home loans?
So they let you hold money at 0% interest and no payments until you sell or refinance. That sounds like an amazing program. Are the presenters on this Dave Ramsey show as ignorant as they sound when they say this is a bad thing? It is true the borrowers are going into the transaction with no equity, but they are working toward building equity. This seems much better than throwing away money on rent.
they have drank the cool aid,
they think ramseys plan made 50 odd years ago works the same way today as it did back then…
Can somebody explain to me why it's bad?
Sounds like a good program to me
Good advice
I don’t understand what the handcuff is? Just pay off $15k loan right when selling? What am I missing?
Not aeeing a major con here, my wife and I did something similar with out home. Housing authority loan with a down payment assistance loan. The down payment loan was paid off before the end of the first year. Maybe theres some details the short diesnt cover?
How is it bad that a zero percent loan has to be paid off with a home is sold?
ALL traditional mortgages have to be paid off when the home is sold- because the security for that loan is not any longer the property of the mortgage holder.
And all mortgages exist until they are paid off or refinanced.
So- PLEASE- for the love of all that’s good and holy- explain the problem with a zero percent loan?
Exactly how is the consumer being screwed?
Totally agree that zero down loans sometimes put people in homes outside their 25% goal of home cost. (This is where all purchases are a buyer beware situation- I deal with a property manager that doesn’t understand he’s actually hurting people when he rents to the at above 30% of their income. I’ve told him it’s evil to put people in situations they will be guaranteed to struggle.)
But unfortunately this will never be the responsibility of people trying to sell you something. You have to take responsibility for yourself.
But still don’t understand the evils of a 0% home loan.
Wait did she says carry no interest, like this is a 0% mortgage?
Basically she is just describing all mortgages. She could just read this with a happy tone and it would sound great. And either way she is still just describing the same thing -a mortgage.
Ill take it
If you Are a millionaire it's convenient for a wealth shuffle if you are millions in debt you are not a millionaire 🙄
The way this is explained is dumb. It’s a normal mortgage but has no down payment requirement above 3% (plus you can finance the 3%)
This is a bad idea because you are going to start off in that home underwater.
The VA loan is similar as well, which can also be dangerous by not putting a down payment.
If the market drops, you’re stuck, but if it increases, you’re good to go
Lets go!!
So he's found a way to rent apartments for what are effectively huge rents and stick you with the repairs?
This is amazing. Where can i get this 0% mortgage? I'll take 10.
Dude this ain’t new…. Been in business for 12 years and this has been available the whole time …
In Virginia it’s called a vhda ran by Virginia and it’s a FHA product
This monster billionaire is building the biggest house here in Michigan.... gross
I always get triggered by Real estate, It's those taxes, completely separate from the comments here. i pay 6700, grrrrr.
Hey! Its mortgage backed securities 2.0 electric boogaloo
Pretty obvious. Neither of these two people seem qualified to host a show like this.
I'm missing everything about this except the opportunity to own a home and pay if off with 0% interest!!
The statement about paying off the 2nd mortgage at the end of the sale is nothing new. I hope no one falls for this nonesense. It's not much different from an 80/20 1st and 2nd mortgage. You'll be in too deep up to your nose.
This is not as bad as you're reading it.
Ramsey's credibility was just thrown out of the window. How can you give financial advice without knowing the basics? Even if you did thingss the Ramsey way and bought a house wit 20%down on a 15 year fixed , then after 7 years decided to sell and move, you would still have to pay off the mortgage when you sold.
This is literally just a USDA loan but from a private lender. Nothing new folks.
You’re saying it’s a loan from the United States Department of Agriculture?
@lllmmm3572 tell me you know nothing about mortgages without telling me 😅
Please explain
Here we go again.....
No interest?
Private fha
2008 vibes ….
Echos of 2008
As you lay it out, you get 3% of the loan interest free. How is that bad? Either you or the guy making the short doesn't understand interest.
If you can borrow money for 30 years and pay it back without interest.
You need to stop giving advice until you learn 5 gade math
lol, what? All mortgages have to be repaid when sold or refied.. that’s not a lot haha.. how are these ppl on a show?
Just like any other mortgage it's exactly the same, question why would anyone paint their nails neon green looks very tacky and ugly what would Dave say??❤😂❤😂❤
You're definitely not making yourself look credible with this video
Don't fall for it people
Two people who have no fing clue about thr real world