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What is $80,000 mortgage at 6.5% annual interest accruing cummulatively over 7 years?
Okay all you math lovers. My ex has a lien on this house. We've
been divorced since Sept. 12, 2001. According to the decree,
...For a mortgage of $80,000 at 6.5% annual interest from this
date 9/12/01. Should the mortgage be paid on or before 9/12/02, there will be no interest. Thereafter, interestr shall
accumulate annually at a rate of 6.5% annually- This shall
accrue accummulatively. Okay.... so, how much do I owe him?
Thanks so much.
The $80,000 was the difference between the assets he took (condos)
and the house which I am still paying
for. When the mortgage is paid, then
I will start paying the $80,000 to him.
Now, the kicker is that I can't start
paying him until the other mortgage is
paid off (2012) By that time, I'm afraid
I'll end up owing him more than it's
worth. I might be better off to sell the
house and pay off the mortgage- give
him the $$ and cut my losses. He claims
that I owe now $140,000 and I thought
someone might be able to tell me if he
is right with his figure and how much it
would cost me if I stayed here another
4 years. It might not be worth it. The house is worth 1/2 mil. Thanks
1 Answer
- Savvy BlondeLv 41 decade agoFavorite Answer
Ah, now that I understand the situation, this is what we call a "future value" problem. It's yearly interest of 6.5%, so the interest for the first year was $5,200. But this stacks onto the $80,000, so on year 2, the interest is calculated on the new principle of $85,200. By the end of year 7 (Sept, 2008) the principle balance will be over $124,000. by the end of year 11, (2012), the principle balance will have doubled to nearly $160,000.
Selling isn't your only option. Why not refinance the mortgage on the house, where his lien is paid ($80,000) and the previous (current) mortgage is paid. Then instead make RATIONAL payments monthly which include principle. That way you keep the asset, and also build additional equity. Get yourself a mortgage for maybe $130,000+whatever the current principle is on the #1 lien.
If this is not possible then it is a simple cost benefit analysis:
The question becomes: will this house gain $36,000 additional value between now and 2012? If so, then go ahead and keep it, yes you'll owe him but you should sell it in 2012, keep the additional equity and pay him off then. If your market is shaky or you don't think it will go up in value by 7% over the next 4-5 years, you should sell now. You also need to factor inflation into the analysis, ie a dollar is worth more today than it is tomorrow, etc. Find out what appreciation rates are, but frankly, again, the best deal would be a refinance that pays him today.
Lastly, I'm not sure where he's getting 140k from, either he does math like a gorilla or you've forgotten some clause in the fine print. Good luck to you!
Source(s): Mortgage Calculator and Guesswork