For the sake of the example I showed the 20 year term since the monthly payments were just slightly
higher than the original loan.
If the discount rate used is lower than the APR of the interest rate for the loan, the NPV will be
higher than the original loan balance.
If your monthly payment is less that the amount of interest that accrues, the interest is added to your principal until it is 10 %
higher than your original loan balance.
The fees can rack up until they're
higher than the original loan.
In fact, the final interest, although fixed, may end up being slightly
higher than the original loans» rates, costing borrowers more in the long run.
Not exact matches
But many borrowers can't afford the lump sum payment, so they roll over the
original loan, plus the
original fee plus a new fee, which is
higher than the initial fee because the borrower owes both the principal plus that fee at this point.
There are a number of reasons why the total amount you owe on your federal student
loan might be
higher than you expect it to be when you compare the current amount you owe with the
original amount you borrowed.
There is little point in taking on the new
loan if the repayments prove to be
higher than the combined
original loan repayments.
(It's also worth noting that, in many cases, creditors have already received enough in interest to more
than cover the
original amount borrowed, especially if the obligation is a credit card or some other
high interest consumer
loan.)
Borrowers who qualify for a
higher loan amount
than the amount of their
original loan may be able to obtain a larger
loan when they refinance.
This is advisable only if you have paid more that half of your mortgage or you have made improvements on the house and the current value is
higher than that considered for the
original loan.
However, since the refinance
loan will be requested for a
higher amount
than the
original loan, the remaining amount can be used for whatever purpose you want.
If there is enough equity, lenders can give a second mortgage on the property but at
higher rates
than if it was the
original loan.
The interest charged is
higher than for the
original loan because it is likely that you will default and the second mortgage lender might not be compensated after the first creditor has taken their money.
Once a borrower's income reaches a level where his
loan payment would be
higher than under a traditional 10 - year repayment term for his
original loan balance, the program by default has him pay the lower of the two amounts.
This is in addition to the
original mortgage and is usually smaller
than the
original loan with a
higher interest rate.
I consolidated all of my student
loans in to two
loans and because of forbearances and deferments, the total is currently
higher than the
original balances....
FRM pros and cons: + Peace of mind that your interest rate stays locked in over the life of the
loan + Monthly mortgage payments remain the same - If rates fall, you'll be stuck with your
original APR unless you refinance your
loan - Fixed rates tend to be
higher than adjustable rates for the convenience of having an APR that won't change ARM pros and cons: + APRs on many ARMs may be lower compared to fixed - rate home
loans, at least at first + A wide variety of adjustable rate
loans are available — for instance, a 3/1 ARM has a fixed rate for the first 36 months, adjustable thereafter; a 5/1 ARM, fixed for 60 months, adjustable afterwards; a 7/1 ARM, fixed for 84 months, adjustable after - While your interest rate could drop depending on interest rate conditions, it could rise, too, making monthly
loan payments more expensive
than hoped How is your APR determined?
If the term of the
loan remains the same as that of the
original adjustable mortgage
loan, the borrower's monthly payment will increase, as the fixed rate will be
higher than the adjustable rate.
If the usury limit is 10 % and 9 % is the note rate, but 4 points are charged, the points are deducted from the
loan amount advanced and that amount is computed over the term with the
original payment required to be paid and the effective interest rate is then computed, the annual percentage rate, which will be
higher than the note rate in this case.