Mortgage Example

Perhaps the best way to explain how to create your own mortgage is by giving a real-life example of a mortgage

A property is Free & Clear, and the value of the property is $65,000.00

Creating a note for $38,000, would make a great LTV for a first position mortgage!

Principle $38,000  Term 20 year  Interest rate 10%   Monthly payment   $366.71
   
Balloon 36 months    $35,909.11  

36 payments of $366.71 = $3,201.56 + Balloon of $35,909.11 = $49,110.67

The first task in selling all mortgages is to demonstrate an adequate loan-to-value ratio to the investor.

The investor wants to make sure there is enough loan to value in the deal to protect their money.

You should always, provide the investor with all the current comparable sales in the neighborhood, and the best idea is get an accurate appraisal of the property.

The formula for calculating LTV is: Loan Amount divided by Market Value.  

The $38,000 loan amount divided by the $65,000 market value equals 58%.

Therefore, the LTV on this mortgage is 58%.

A great LTV for a private mortgage!

This note will sell or exchange, for $ 30,500 and the investor or exchangor will receive a 16 % yield on their investment. 

Because of the "Time Value of Money," this gives the investor a 16% yield on their money.

This is the classic Win/Win/Win transaction. The investor will have earned a great yield on their investment.

And you will have received $ 30,500 in cash to buy and fix-up a property, or exchange for a boat, car, or what ever.

All of it without having to qualify for a loan or use any of your own money toward the purchase or exchange.

Now you can understand why this is a great way to purchase or exchange property.

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or call Wayne H. Wagie 786-326-4747

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  WHAT IS THE TIME VALUE OF MONEY
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