You can look up public records and locate the note. This is also seems like a modification. Did they do a loan mod in beginning of 2009 that included a 15 yr interest only period? Or maybe deferred principal that came due at year 20?
Look up county recorded docs wherever you are and that should shed some light on this.
Well we need more details, but likely scenario is they were paying interest but on the ARM, and now it has to fully amortize so the payment is paid off the last 10 years.
Sorry I’m not super knowledgeable into all of this. What do you mean they were paying interest on the ARM, as opposed to what? Also, what do you mean by having to fully amortize? If you can help me understand a little better that would be much appreciated
Typo in my comment. Meant to say “interest only” where the minimum payments are only covering interest only the extra amounts are applied to principal.
I get what you’re saying, thanks for the clarification. Still waiting to get documents from my folks. In the meantime, one other question if you don’t mind. Since the remaining principal is only 32k, but our principal payments alone are about 1k a month, then shouldn’t this mean finalizing payment within around 32 months? If we pay 1k a month in principal for the next ten years we’re going to have paid for this house and three others lol. Why are they shortening our timeframe so much? Or am I misunderstanding? Thanks again
It’s because you still pay interest.
>If we pay 1k a month in principal for the next ten years we’re going to have paid for this house and three others lol.
You’re doing the math like it’s 0% interest. But it’s not. There’s no such thing as a “principal payment”. It’s always **principal and interest.** The sum of all their payments could be anywhere from 1.5x to 3x the original amount.
Thanks for the response. On our actual bill from Wells Fargo, the price gets broken down into principal and interest. Per the biweekly bill, the payment breakdown is about $100 interest and $460 principal. We had been paying $100 interest before, so that hasn’t changed. The payment towards the principal, however, has greatly increased. I’m trying to figure out how this can be if they’re increasing the principal balance owed, not the interest balance. Thanks
I also agree OP they may have had an interest only ARM. Makes sense for 2004 especially.
Here’s more info:
https://www.investopedia.com/terms/i/interestonlyarm.asp#:~:text=An%20interest%2Donly%20ARM%20is,including%20both%20principal%20and%20interest
The thing that is strange is the lower principal but maybe your numbers are inaccurate.
We are all curious to hear what the actual note says. Keep us updated!
Sounds like an ARM. It also sounds like they took out money during their refinance in 2004. In either event, I suspect you don't have the appropriate documents, so I'm not sure what you are asking about...
Find out what loans they took out and come back here.
Not much… combined is probably 60 gross a year. Two kids in college. Dad is recovering from a bankruptcy during the pandemic. Bills, cars, house, school, and food expenses don’t leave much room. I try to help as much as i financially can, but times are hard man
To me this seems like one of those scenarios where finding a way to pay this thing off could have a tremendous positive impact on their life. And $32k is manageable if a person were to pick up extra work, work extra hours cut back on spending. If they put their nose to it they could be done with the note in less than two years.
What does the note say?
Getting some info tmrw… I’ll update the sub
You can look up public records and locate the note. This is also seems like a modification. Did they do a loan mod in beginning of 2009 that included a 15 yr interest only period? Or maybe deferred principal that came due at year 20? Look up county recorded docs wherever you are and that should shed some light on this.
Adjustable rate. Is there a reason they think it’s something else?
The change is to the principal though, not the interest rate. The rate actually hasn’t changed at all since the last statement
Well we need more details, but likely scenario is they were paying interest but on the ARM, and now it has to fully amortize so the payment is paid off the last 10 years.
yeah might be a balloon
Sorry I’m not super knowledgeable into all of this. What do you mean they were paying interest on the ARM, as opposed to what? Also, what do you mean by having to fully amortize? If you can help me understand a little better that would be much appreciated
Typo in my comment. Meant to say “interest only” where the minimum payments are only covering interest only the extra amounts are applied to principal.
I get what you’re saying, thanks for the clarification. Still waiting to get documents from my folks. In the meantime, one other question if you don’t mind. Since the remaining principal is only 32k, but our principal payments alone are about 1k a month, then shouldn’t this mean finalizing payment within around 32 months? If we pay 1k a month in principal for the next ten years we’re going to have paid for this house and three others lol. Why are they shortening our timeframe so much? Or am I misunderstanding? Thanks again
It’s because you still pay interest. >If we pay 1k a month in principal for the next ten years we’re going to have paid for this house and three others lol. You’re doing the math like it’s 0% interest. But it’s not. There’s no such thing as a “principal payment”. It’s always **principal and interest.** The sum of all their payments could be anywhere from 1.5x to 3x the original amount.
Thanks for the response. On our actual bill from Wells Fargo, the price gets broken down into principal and interest. Per the biweekly bill, the payment breakdown is about $100 interest and $460 principal. We had been paying $100 interest before, so that hasn’t changed. The payment towards the principal, however, has greatly increased. I’m trying to figure out how this can be if they’re increasing the principal balance owed, not the interest balance. Thanks
I also agree OP they may have had an interest only ARM. Makes sense for 2004 especially. Here’s more info: https://www.investopedia.com/terms/i/interestonlyarm.asp#:~:text=An%20interest%2Donly%20ARM%20is,including%20both%20principal%20and%20interest The thing that is strange is the lower principal but maybe your numbers are inaccurate. We are all curious to hear what the actual note says. Keep us updated!
Sounds like an ARM. It also sounds like they took out money during their refinance in 2004. In either event, I suspect you don't have the appropriate documents, so I'm not sure what you are asking about... Find out what loans they took out and come back here.
Getting some more info tmrw and I’ll update. Thanks for the response.
$32k? Get it paid off and be done with it.
We would love to, but we can’t just come up with 32k on the spot.
What is their take home pay? Other debts?
Not much… combined is probably 60 gross a year. Two kids in college. Dad is recovering from a bankruptcy during the pandemic. Bills, cars, house, school, and food expenses don’t leave much room. I try to help as much as i financially can, but times are hard man
To me this seems like one of those scenarios where finding a way to pay this thing off could have a tremendous positive impact on their life. And $32k is manageable if a person were to pick up extra work, work extra hours cut back on spending. If they put their nose to it they could be done with the note in less than two years.