(Closed) SO confused about refinancing/selling. help!

posted 5 years ago in Money
Post # 3
Member
2780 posts
Sugar bee

@sugarcube:  first of all, lets say you owe 200k on your house and you want to sell. YOU set a sale price, the new buyer has nothing to do with your loan. Ideally you’d want to profit from the sale of your house so you could list it for let’s say 400k and the buyer would go get their own loan for 400k they pay you, you pay the 200k to your bank to pay off your loan and you pocket the Rest. Lets say instea that you owe 200k but you can only sell the house for 150k cause the market is down. Then the buyer would get a loan for 150k and you would still owe your bank or lender the addition 50k.

 

in regards to refinancing your car, unless your interest rate is VERY high it’s usually not even worth it and if you do refinance you want to refinance for the same term that you have left on your current loan. Say you have 48 months left of your loan when you refinance you want to finance for 48 months otherwise, if you do 60 months, you end up paying a lot more in the long run for the car. The refi will be off the principal amount still owed on the car.

Post # 5
Member
9142 posts
Buzzing Beekeeper
  • Wedding: November 2013 - St. Augustine Beach, FL

@sugarcube:  #1 the buyer pays or finances list price on the house. #2 the person purchasing your car pays or finances the pay-off price of the car (call your lender to find out this amount because some loans have pre-payment penalties.)

Post # 6
Member
2780 posts
Sugar bee

@sugarcube:  he did it incorrectly because you don’t actually owe 9k. You owe 8k but if you take the rest of the time to pay it off you’d end up paying 9. If you paid it off tomorrow you would pay 8k. Same thing with the house. You only pay interest when you take time to pay off the loan. That’s why many people pay above and beyond the minimum amount of their car and house to save money long term on interest. Interest isnt a factor until you start taking time to pay things off.

Post # 8
Member
2780 posts
Sugar bee

@sugarcube:  the only reason to refinance a car is to get a lower monthly. My interest rates are already low so refinancing for me doesn’t really make sense, it comes to like a difference of $12 a month so it’s pointless. I would go try to talk to someone else and make sure you know the exact dollar left on your auto loan (the principal amount) and then go from there.

Post # 9
Member
9142 posts
Buzzing Beekeeper
  • Wedding: November 2013 - St. Augustine Beach, FL

@sugarcube:  No your list price would be fair market value at the time of the sale which is hopefully more than the $200K you owe in principal on your mortgage.  If it’s more then it covers what you owe on your mortgage.  If it’s less, then you are stuck with any remaining principal.

Ex #1 – list price is more than principal owed – List is $360K, Principal is $200K; the buyer would finance $360K and you would walk away with the balance of $160K minus any fees and taxes

Ex #2 – list price is less than principal owed – List is $180K, Principal is $200K; the buyer would finance $180K and you would walk away with a debt of $20K plus any fees and taxes (this is what people mean when they say you are underwater on a house; you owe more in principal than what you would get for fair market value)

Post # 10
Member
8661 posts
Bumble Beekeeper
  • Wedding: October 2013

@sugarcube:  

if you still owe on your house when you sell it, you don’t owe the interest that you haven’t accrewed yet.  say you buy at $300k but with interest over the course of 30 years it is more like $500k.

then you want to sell your house when you still owe $150k.  if you pay the $150k, you don’t owe the interest for the future because you paid off the principal and now have 0 balance to charge interest on. 

 

Post # 12
Member
8661 posts
Bumble Beekeeper
  • Wedding: October 2013

@sugarcube:  don’t sell the house for what you owe, sell the house for the value.  hopefully it will go up in value.

 

 

 

i bought my house for $65k less than what the people before me paid for it.  they took a loss.  prices are now starting to go up.  when i am ready to sell my house (in 7ish years), i hope to list it for more than i bought it for.  at that point, i should be able to pay off what i owe on the house and have money left for a downpayment on the next house.

 

 

 

Post # 13
Member
2604 posts
Sugar bee
  • Wedding: October 2010

@sugarcube:  When you sell a house you sell it at market value so the buyer takes out their own mortgage.  Assuming you’ve paid down your original principal amount and the house has increased in value, you pay off the principal of your original load with the proceeds of the sale and what’s left is your profit. 

So, say you bought the house for 300K and have paid down your loan principal to $200K.  You put the house up for sale and its market value is now $350 K and that’s what you sell it for.  The proceeds of the sale will pay off your $200K loan balance and you’ll walk away with $150K in profit (mius sales commissions, taxes, etc.) 

If you refinance your car note you will only be refinancing the principal left on the original loan. 

Post # 14
Member
8455 posts
Bumble Beekeeper
  • Wedding: April 2013

@sugarcube:  most loans have interested compounded daily, weekly or monthly which is dependent on the amount of principal you owe.  Therefore the extra interest costs aren’t actually there until the time comes up (daily, weekly, or monthly).  For example (fake numbers), lets say that I owe $10 to the bank with $1 interest per week (this would normally be a % but I’m using these figures for simplicity).  The first week goes by and I pay $1 (interest only), so I still owe $10.  The following week I owe another $1 plus the original principal of $10.  If I pay the $11 off that week, then the principal goes to 0 and any % of 0 would be 0 (provided that my loan doesn’t have any early pay-off penalties).  Hopefully this clarifies things a bit.

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