Bank gave me $92,000 bigger mortgage than I need?

[adamtheman]

Hey,

I've got a question. So I bought a house and I paid $277,500 for it and I put 25% down, so the total mortgage came to $208k and change. I just went to sign the papers today and basically was told by the lawyer that the way they had set it up was they gave me a $300,000 mortgage, and the $208,000 is a loan within it.

I guess I wanna know, does this mean I could get another $92,000 towards a house in the snap of my fingers or what? I'm just wondering I guess. I've never heard of this before.

Adam

[bokchoy]

are you paying more interest because of it?

[adamtheman]

No... not paying more interest.

[gman]

Is the extra $92K secured Line of Credit?

You probably got the terms mixed up. Mortgage is the loan.
The lawyer probably told there are $300K 'something' on the house and you call that 'something' mortgage.

[glacier76]

Two explanations:

1) You got a secured line of credit with a maximum limit of 300K, but only the 208K is being advanced.

2) Were you looking at one of the land title registration documents? If so, the bank probably instructed the lawyer to register the mortgage as having a principle amount of 300K because you have a running mortgage. A running mortgage allows you get readvancements on your mortgage, and you don't have to see a lawyer to register the borrowed funds. It also allows you to get a secured line of credit. You still need to be qualified, but it just avoids paying the legal fees associated with setting up a secured line of credit or HELOC. The number 300K indicates that's the most you can borrow from the bank. But that's up to you. The actual terms of your mortgage are listed in the actual documents from the bank.

[condorguy]

Should you not have clarified this with the lawyer instead of signing the documents and then asking the members on the board?...I always I understand anything before I sign any document...maybe you should phone the bank and ask what this is all about...

[rc51]

Hey,

I've got a question. So I bought a house and I paid $277,500 for it and I put 25% down,
Adam

Where did you find a house for 277K?!?! I wish. We had to dish out almost double that here in Calgary..and will have to dig even deeper to almost 4x that amount if we make the move to Washington DC!!!

[Hubster]

Should you not have clarified this with the lawyer instead of signing the documents and then asking the members on the board?...I always I understand anything before I sign any document...maybe you should phone the bank and ask what this is all about...

While I believe Glaciers explanation above probably clarifies the situation, you definitely need to find out for sure ASAP.

As condorguys says, we are just anonymous posters on a message board. While I am a mortgage consultant and spend my time assisting folks in every avenue, you need clarification from your lender of what it is exactly you "have already signed".

GL

[Hellfire]

No big deal, someone ****ed up. When I got my mortgage the bank gave me an extra $100,000. I had the cheque and everything. Just go back and tell em to fix it, why borrow more? You'll have to pay it back + interest if you keep it...

[adamtheman]

Two explanations:

1) You got a secured line of credit with a maximum limit of 300K, but only the 208K is being advanced.

2) Were you looking at one of the land title registration documents? If so, the bank probably instructed the lawyer to register the mortgage as having a principle amount of 300K because you have a running mortgage. A running mortgage allows you get readvancements on your mortgage, and you don't have to see a lawyer to register the borrowed funds. It also allows you to get a secured line of credit. You still need to be qualified, but it just avoids paying the legal fees associated with setting up a secured line of credit or HELOC. The number 300K indicates that's the most you can borrow from the bank. But that's up to you. The actual terms of your mortgage are listed in the actual documents from the bank.

I think you nailed it... the #2 one is what I believe it is now that I recall the lawyer telling me, I just didn't grasp it all at the time. Cheers!

[adamtheman]

Where did you find a house for 277K?!?! I wish. We had to dish out almost double that here in Calgary..and will have to dig even deeper to almost 4x that amount if we make the move to Washington DC!!!

Yeah I grew up in Vancouver, I feel your pain. It will hurt you even more to know that my house is 2,672sqft, 8 years old, on .26ac, fully finished 2 bedroom / 1 bath suite down, 2 full kitchens, 3 bedrooms 2 bathrooms up, real hardwood floors in living room and kitchen, 400sqft deck on back, 370sqft deck out front with the most gorgeous oceanview ever :D

[rc51]

Yeah I grew up in Vancouver, I feel your pain. It will hurt you even more to know that my house is 2,672sqft, 8 years old, on .26ac, fully finished 2 bedroom / 1 bath suite down, 2 full kitchens, 3 bedrooms 2 bathrooms up, real hardwood floors in living room and kitchen, 400sqft deck on back, 370sqft deck out front with the most gorgeous oceanview ever :D


Too big..we have 2400 sq ft and then a 900 sq. ft home theatre in the basement..for the 2 of us. If/when we make the move to DC, I'm going to try very hard to convince the wife to downsize the house (less to maintain) and invest the difference in a cabin cruiser as I won't be land locked anymore.

The homes she's been looking at in the DC/Virigina area all around the 4000 sq ft on the Potomac...there's no way I want to be taking care of and maintaining that big of a house...I'd rather be out golfing...or at the least waxing my boat :)

My family is still out in Vancouver... they're all in the rental property business as well..taking advantage of the poor folks who can't come up with the downpayments to buy their own homes... I keep my Dad to keep buying and renting them out.... :D

[kareshi]

You guys are rich.. given too many rich ppl in this world, it will only make the gap between rich and poor bigger