Refinancing Home Mortgage
I am curious as to what is the typical percentage paid on an existing mortgage in the secondary market currently. Is it merely a present value of money calculation, or is there more of a discount premium? For example, say you have a $300k 30yr fixed at 6%, by my calculations, over the life of the loan the lender would receive $347,515 in interest which would be there profit for lending the money, typically if a contract like this is sold as a right to receive these future payments they will not receive this entire amount due to present value calculations, but is there any more or less of a discount? So what is the rate or percentage a typical loan is sold for in a secondary market within its first few years? Also, do banks accept lower offers to get rid of loans now than the principle balance much as they are so willing to get rid of homes in short sale situations, etc. for banks that need cash and have obviously lent out most of their assets and want some cash assets back. The reason I am asking is, I know a personal lender who would possibly being willing to hold a mortgage for me at an equal or current rate as I currently have and that way I would be paying them a substantial and safe interest rate instead of a bank, and instead of me refinancing my current loan with a loan from this private individual I was thinking I could have them maybe make an offer to the current holder of my note to buy it, that way I would avoid closing costs, etc. And possibly they would give this person a good deal since so many banks are willing to liquidate loans for cash right now at substantial discounts to meet other needs even though they know I am a great borrower, I would think they may be willing to at least even take just the principal balance, or even less, and be happy with the interest they have received over the last 3 years, and enjoy having actual cash on hand since so many banks are hurting with other loans, though I don’t know my lender’s situation, they are a big bank/lender so I am sure they are experiencing difficulties with some borrowers and the economy as all others are. If anyone works or has personally held a loan and knows what type of value loans have in the secondary market compared to their principal balance and the expected income over the life of the loan I would greatly appreciated it. Also any tips if my thought is no good.
In response to Ronwhiz’s attempt at an answer, assume this is as low of a risk loan as there could be that the lender will recoup all the principal and interest, which it is. Borrower has great credit, solid income and assets, and the loan-to-value ratio is still only half since I paid half cash for the home. I am merely looking for a general answer such as, typically a loan that seems to be low risk for like this goes for about 90% of the present value of the future income, that’s all I am looking for, not more insight, just a generic answer, yes obviously, like most things, this will be evaluated on a case by case basis, I am just looking for a general average generic response, so please (Ron for example) don’t give me further advice, opinions, or insight into the issue, this is yahoo answers, not a forum for your opinion, so please if you can answer this question please do, but an answer would be in the form of a percentage or rate not an opinion or insight.
This is about mortgage information questions.
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