Managing Mortgage Interest Payments and Buy-Downs in Rising Rates Scenario
Mortgage Interest
Differential Payments
(MID)
Rising Interest
Rates
MID Payment “Buy Down”
An amount that when added to the
down payment will reduce the
replacement dwelling mortgage to an
amount that can be amortized with the
same monthly principal and interest
payment over the same remaining
term as the displacement mortgage.
MID Payment “Buy Down”
•
$100,000
Mortgage, Term 360 Months,
Interest Rate
4.5%
, Payment =
$506.69
•
$80,164
Mortgage, Term 360 Months,
Interest Rate
6.5%
Payment =
$506.69
•
$100,000
–
$80,164
=
$19,836
$99,239.12
Items Needed
•
Original Mortgage
•
Payoff Information
•
Most Recent Mortgage Statement
•
New Closing Statement
•
Prevailing Interest Rate (TC62-50)
•
Mortgage Differential Calculator
Points
•
Origination Points
•
Loan Discount (Buy Down) Points
Agents Responsibility
•
Early
contact and communication
•
Early
Communication with the bank
•
Collect required information
Early
•
Encourage to pay on loan at closing
•
Update Prevailing Mortgage Rates
•
Do not disclose amounts until
approved
Project Impacts
•
Budget
•
Average $40,000
•
10 Relocations =
$400,000.00
QUESTIONS?
11
Required
Notices
•
All notices shall be provided with
appropriate translation and
counseling.
•
Agent shall deliver each notice in
person.
•
When not personally delivered, a
notice shall be sent by certified
mail, return receipt requested.
General Relocation Notice
•
Issued to all persons scheduled to move
•
Issued as soon as practical after right of way
authorization
•
Typically issued when worksheet information
is being gathered
•
KYTC’s Relocation Assistance Brochure
contains the information required of the
General Relocation Notice.
Notice of Relocation
Eligibility/90 Day Notice
•
Notice of Relocation Eligibility is typically
combined with the 90 Day Notice.
•
Notice is to be issued at:
•
Issuance of Notice of Intent to Acquire
•
Initiation of Negotiations
•
Actual acquisition of the property
Timeline for Issuance of Notice of
Relocation Eligibility/90 Day Notice
•
Owners: Notice is issued at the initiation of
negotiations
•
Tenants: Notice is issued no later than 7
working days from the date of initiation of
negotiations
•
Subsequent Occupants: Notice is issued no
later than 7 working days from the date KYTC
obtains possession of the property.
A 90 Day Notice
CANNOT
be issued to a person being
displaced from a dwelling
until at least one
comparable replacement
dwelling is made available.
Alternate Procedure for Issuing 90 Day
Notice
•
Issued to tenant occupants when there is
not sufficient rental replacement housing.
•
Requires prior approval from Central Office.
•
Delivered to the tenant occupant within 7
working days of the initiation of
negotiations.
•
Includes an explanation of all services and
payments the occupant is eligible to
receive.
•
Does not include a 90 Day Notice
30 Day Notice to Vacate
•
Issued promptly after KYTC obtains
possession of the property.
•
60 days have passed since the issuance of
the 90 day notice.
•
The notice shall state the date by which the
property is to be vacated.
For the past 20 years interest rates have been dropping and were low. As low as 2.5% for a 30 year Fixed. Since 2022 interest rates have been on the rise. Now 30 year fixed 7.5%
Understanding Mortgage Interest Differential (MID) payments and the concept of buy-downs to adjust mortgage terms in the face of rising interest rates. Learn about calculations and necessary information for managing mortgage payments effectively.
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Presentation Transcript
Mortgage Interest Differential Payments (MID) Rising Interest Rates
MID Payment Buy Down An amount that when added to the down payment will reduce the replacement dwelling mortgage to an amount that can be amortized with the same monthly principal and interest payment over the same remaining term as the displacement mortgage.
MID Payment Buy Down $100,000 Mortgage, Term 360 Months, Interest Rate 4.5%, Payment = $506.69 $80,164 Mortgage, Term 360 Months, Interest Rate 6.5% Payment = $506.69 $100,000 $80,164 = $19,836
Items Needed Original Mortgage Payoff Information Most Recent Mortgage Statement New Closing Statement Prevailing Interest Rate (TC62-50) Mortgage Differential Calculator
Points Origination Points Loan Discount (Buy Down) Points
Agents Responsibility Early contact and communication Early Communication with the bank Collect required information Early Encourage to pay on loan at closing Update Prevailing Mortgage Rates Do not disclose amounts until approved
Project Impacts Budget Average $40,000 10 Relocations = $400,000.00
QUESTIONS? 11
Required Notices
All notices shall be provided with appropriate translation and counseling. Agent shall deliver each notice in person. When not personally delivered, a notice shall be sent by certified mail, return receipt requested.
General Relocation Notice Issued to all persons scheduled to move Issued as soon as practical after right of way authorization Typically issued when worksheet information is being gathered KYTC s Relocation Assistance Brochure contains the information required of the General Relocation Notice.
Notice of Relocation Eligibility/90 Day Notice Notice of Relocation Eligibility is typically combined with the 90 Day Notice. Notice is to be issued at: Issuance of Notice of Intent to Acquire Initiation of Negotiations Actual acquisition of the property
Timeline for Issuance of Notice of Relocation Eligibility/90 Day Notice Owners: Notice is issued at the initiation of negotiations Tenants: Notice is issued no later than 7 working days from the date of initiation of negotiations Subsequent Occupants: Notice is issued no later than 7 working days from the date KYTC obtains possession of the property.
A 90 Day Notice CANNOT be issued to a person being displaced from a dwelling until at least one comparable replacement dwelling is made available.
Alternate Procedure for Issuing 90 Day Notice Issued to tenant occupants when there is not sufficient rental replacement housing. Requires prior approval from Central Office. Delivered to the tenant occupant within 7 working days of the initiation of negotiations. Includes an explanation of all services and payments the occupant is eligible to receive. Does not include a 90 Day Notice
30 Day Notice to Vacate Issued promptly after KYTC obtains possession of the property. 60 days have passed since the issuance of the 90 day notice. The notice shall state the date by which the property is to be vacated.
