Refinancing Home

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Last Post by Stuart Matthews 6 years ago

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Motogopher

(@motogopher)

Trusted Member Customer

Joined: 6 years ago

Posts: 29

Topic starter February 9, 2021 7:38 pm

My modeling year starts this year, 2021. I also closed the refinancing of my home in the first part on January. My home is mostly paid for so my home's value is quite a bit higher than my loan value. It appears that the calculations for expenses are taking the difference between the value of the home and the value of the loan as some kind of down payment on the home and sucking a large chunk of my savings out throwing the entire plan projection into a tailspin to the bottom. I know the net worth calculations need the home value so how can I enter the home's present value and the low dollar mortgage and not have the tool think I made a huge down payment to get the mortgage?

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Refinance

Motogopher

(@motogopher)

Trusted Member Customer

Joined: 6 years ago

Posts: 29

Topic starter February 9, 2021 7:58 pm

One more piece of this puzzle. I bought my home in 2018, so if I enter 2018 as the Year of Acquisition then it will start my loan in 2018, not 2021. This is my assumption as there is no date column for when the loan starts so I would assume it's the year of acquisition. There is only Starting Loan Balance, no date. So I'm not sure how to juggle the numbers to show true home value, original purchase date and current mortgage. Thanks!

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Stuart Matthews

(@smatthews51)

Member Admin

Joined: 6 years ago

Posts: 618

February 10, 2021 8:05 am

Hi Motogopher, I'll try to answer both of your questions in this reply. The key to making this work is to understand that PRC is capable of modeling existing mortgages and future mortgages, but it asks for slightly different inputs depending on which case you are modeling. In your case, you're modeling an existing loan (ignore the fact that you refinanced in early 2021) on a home purchased prior to the start of the modeling period. Therefore, here are the inputs you need to use:

Year of acquisition = 2018; cost basis = whatever you paid for it in 2018; market value = whatever it's worth at the start of 2021; starting loan balance = the balance on the refinanced mortgage at the start of 2021; APR = interest rate on your refinanced mortgage; monthly payment = the monthly payment on your refinanced mortgage. That's it. PRC will understand that this is an existing mortgage and will not generate any down payment. Further, it doesn't need to know when the loan was created; the starting loan balance (i.e., the loan balance at the start of the modeling period) , the APR and the monthly payment tell it everything it needs to know to model this mortgage.

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