Industry sign banking north carolina permission slip later
that's it I am anybody have anything exciting half there to break you did not have a cigarette [Music] how long has it been I think she's gonna make it what do y'all think smoke-free wearing my mother we were talking about we're on page 279 and before the break we were talking about how provocation and the next heading there is deeper trust now y'all remember we said that North Carolina is a title theory state remember that yes in a title theory state we don't use mortgages by the way we don't use mortgages but we called that out on the street they'll haven't seen any company's called deed of trust companies have you know you see you don't see deed of trust companies you see mortgage companies but in North Carolina we don't use mortgage we use a deed of trust in fact don't come over with me to eat and there is an example of truck I want to do this you see here and I want you to do this where it says grantor and you'll see that we'll paste it down I want you to write forward right there all right now under that oh and I also want you to write mortgagors yeah grant door [Applause] you know remember we said the mortgage or is the borrower in the deed of June is the grandeur and also is the trust oh so write that down - Dottie come back to the next thing it says trustee and I want y'all to put third party selected by the bank and that's that Joe Jones I mentioned to you earlier and under beneficiary don't see that I want you to put lender mortgage easy or if you G so even though we don't use mortgages in North Carolina we use the vocabulary of and the very last sentence back on page 277 says what I just said the term mortgage mode is commonly used for teacher trust now as we mentioned earlier as we mentioned before the break when you borrow money to sign a note and you sign in North Carolina a deed of trust which many states are talking mortgage and when you sign a note this is your personal promise to pay as I mentioned before the break if everybody wouldn't understand honest that's all you would need but since some people are not 100% honest we have a team of trust also by the way in the note in the note we have the terms so if we're paying 360 payments of $600 a month that information is not in the theme of trust it's in the note it's in the note and so now in those we have several different clauses we have several different clauses Claes and one of them is the acceleration lost almost all mortgages knows how acceleration clause and here's what an acceleration clause is well better yet let me explain to you what would happen if we didn't have an acceleration clause if we didn't have an acceleration clause so I go down to the bank and I say you owe me $100,000 I'll pay you back six hundred a month well about a year later I didn't pay my $600 well what could the bank did well they could sue me for $600 that's all I hope next month I don't think they can sue me for $1,200 that's all right next month I don't pay they can sue me for $1,800 that's all I hope well you can see how ridiculous that is so all mortgages all notes have a acceleration clause that says if you don't pay as agreed we're going to sue you for the end we're going to accelerate the entire hundred thousand dollar and Sue you for a hundred thousand dollars you know with it and so to say this is a couple flaws would be a very understatement if you will another Clause is a prepayment penalty clause good news is this is a very uncommon cost and it's uncommon because well who has these clauses and the answer is lenders that spend a lot of money of rigid aiding loans you know when loans are created in the mortgage industry they call this a to nation and it's very expensive sometime for people to find people that want to borrow money from especially if they charge high interest rates so here's a lender that advertises on TV and does a lot of stuff to originate loans and so he gets somebody to borrow money from him and say 12% in today's world well the last thing he wants to do is be paid off which I'll agree with that yes he wants that 12% coming in coming in coming in coming in so he has a prepayment penalty free payment penalty in the mortgage note that says if you pay us early there's a 1% 2% 3% penalty and so we have a prepayment penalty that we have to pay and y'all might write yourself a note there that says prepayment penalties are the work of the devil you could put that down actually I was teaching the class about 10 years ago I had a young lady class that worked for a lender that did these kind of loans she said Ron that's not fair for you to say these are the work I said well I guess I shouldn't say that she said I said but you know if you stop think about it P P P three 2666 upside down freedom a penalty please no ever oh and let me tell you something you might ask yourself how many how many are sitting there thinking who would get one of these anybody thinking that yeah the answer is somebody that doesn't know they have you know they just don't even know what did they find out that's too late when they borrow $100,000 they've been paying for five years they go to get a payoff when they sell their house and their payoff is one hundred and one thousand dollars what well you know you got a 5% free payment penalty prepayment penalty I should have read that mortgage you know how you can tell if you have a prepayment penalty I read that note so anyway next thing is a do own sailcloth and you know the best way to explain do own Selfoss is let me give you a little history lesson and y'all notice is we've been together quite a bit I talk to you all about the old days because this the only place where you can hear history from my hours there I'm half a point of view but in the old days the old days being the 70s which is very common very common that when I would sell a house for say a hundred thousand dollars the guy owned seventy thousand dollars well the buyer would come along and give him $30,000 and take over that mortgage and he would own the house three or four years he would turn around himself and the next guy would take over that mortgage and oftentimes mortgages were taking over four or five six seven eight times well banks make more money of rigidity loans than they make collecting interest especially if rates are going up now they made a loan 15 years ago which in today's world since rates have been going down maybe all right well the race start back up they make it loan today for three percent they don't want it taking over taking over take taken over what they wanted they want to paint off so they put a do own sale clothes in the mortgage they put a due on sale clause that says its mortgage is due if you if you pay it off and so do all self boss is well different cell causes or any just about all conventional mortgages how can you tell if you go tell the quick old story this happened about talking about 1995 I was upset analysis know you know call this expired listings guys listing expired the MLS and I hate going out to list his house I was sitting there talking with him in his kitchen table and his phone rang and he answered the phone and he said when I'm sorry but this is a very important call I got to take this call about 10 minutes that's fine so I'm sitting there in his kitchen table and he went and I'm just sitting there in his kitchen table and he brought out a steel box don't know what the steel box is everybody has a steel box that's that box where you put all your papers and everything y'all got one it might be a grocery sack but you've got all right so he brought out his steel box I'm sitting on the table just to entertain myself for no other reason I'm kind of plundering through the steel box and there's his mortgage then this house was like a hundred and twenty five thousand dollars and it had been for sale for 18 months it had been listed at three different Realtors and there's nothing special about the house nothing wrong with it either well I'm sitting there reading this mortgage he had like a ninety thousand dollar mortgage and there was no do old Santa Claus now by 1995 this was like standard operating procedure I mean every mortgage you can find head Doolittle cell phone most of they were very it was scarce to find one that did I'm sitting there looking at that he finished his phone call he came back and I said this is your mortgage he said yeah I said if you don't have a dual cellphones he said what is that I said well somebody can come along and give you thirty thirty five thousand dollars take over this mortgage which by the way at the time interest rates were nine ish 10 ish percent can you imagine did you say yes I don't have to imagine that I was there wouldn't it happen folks said but his rate was off we got like 70 or something like that and make a long story short I had another house open about 10 days I mean we were sitting at the closing table because I went back to the office and said hey I got a no qualified anybody on the planet could buy this house just put down some money and let's go to close and so we sold it he held a little second mortgage for about $5,000 and thereby lives happily ever after and the moral of that story is read the mortgage because I'm not telling you I always read people's mortgages now oh it is list of clauses this list of clauses this should be on the list oh another word for alienation and another thing that should be on this list don't turn with me to page 321 at the top of the page you see where it says residential lending practices and procedures paragraph on top of that they mention a thing called the subordination agreement you'll see there and we have not talked about priority of mortgage yet heaven I still got jumped over a page 321 but is everybody heard of my first mortgage the second mortgage the third mortgage yes what's the tear between a first mortgage a second mortgage in the third one's the day they were recording the date they report on and now now this is important because let's say I want a hundred thousand dollar house and I've got a $50,000 first mortgage what do y'all think pretty good bed I'm gonna make those payments would y'all agree with that what about when I've got a $20,000 second mortgage still pretty good bed I'm gonna make those payments when y'all green I got $100,000 third mortgage might be like a little bit on that that might be a little miss in making those payments because if they foreclose I don't have that much equity yo and everybody understand that equity is their street what you owe and what the property is worth everybody with me yeah now the truth is nobody would make me $100,000 third mortgage on a house that already had a fifty thousand first to the twenty thousand second to go with you but the priority of mortgages is very important now here's what a subordination clause is sometimes mister mister borrow and this'll happen more usually with an owner he'll mortgage mister developer goes to mr. farmer and he says mr. farmer you got this five acre plot for sale you 100 how about if I give you 50,000 down and you hold a mortgage for 50,000 and the farmer says okay that sounds like a pretty good deal to me they go with me and that is a pretty good deal when you agree then the Builder developer says now listen I want to do this deal but I want you to put a subordination clause in the mortgage and the farmer says what is that he says well I'm going to go down to the bank and I'm gonna borrow two hundred thousand dollars to build a house on this five acre parcel now the bank won't loan me the money unless they can have my first mortgage well they can't have my first mortgage because you have a first mortgage so what I want you to do is agree now that you will subordinate to the bank at a later time and the farmer says okay I guess I can do that so he denies so now the developer builder goes to the bank and get some mortgage that's a first mortgage because the farmer agreed to let them but in live in front of him does that make sense so now we've got a $200,000 first mortgage and a $50,000 second mortgage and the second mortgage instead of being on a five acre field is on a mini-mansion three hundred and fifty thousand dollar house does that make sense and so that's a that's a common flaw or that's that's not a common clause that's a clause why would the first mortgagee do that jeonggi that question why would the farmer do that well I hate to tell you all this sometimes it's because he doesn't know any better you know because seems like a good idea and a lot of time that's the only way the developer oh by the way and sometimes by the way can you don't see some danger here yeah which would you rather have $50,000 first mortgage or a $50,000 second mortgage behind the $200,000 first mortgage now the truth is if everything goes according to plan it's a good point but if things go south the farm that's what the farmer says that's what the farmer's wife says yeah why did you do that and the answer is I didn't know any better single leg leg doc okay but but let's say we do the link you know you're supposed to pay me about $50,000 on this amount of time not even developer you want that Bella you know the residential so you gonna put your money into it well by the telling that yourself a house you really got a $50,000 so right I believe that most of us won't you have to have a little time before you can bake my honey pot I mean yes I'm a lady huh you know this mortgage buh buh yes even that's the secondary mortgage but if I'm gonna give you 30 eaters I don't wanna even 30 years gonna Hollis loading your mommy gonna give you five those are the original terms you made that would be fine you know so I mean you can have a sick of war Dennis feel on the background make you wanted first before the bomb dogs yeah good jump our markets is watching yeah okay and so question one you could have a five year payout on the second on the on the fifty thousand first that turned into a second yeah it's still a five year path so technically there's no stipulations between the owner of the land and the developer as far as they're negotiating and working out the deal yeah whatever the pig agreed in a single payment in three years or whatever they agreed to and that's very common with those kind of deals it's just a single payment in three years and he's only screwed if he if he defaults on on that loan and they're trying to if he can folks on the first yes the farmer is in the deep blue sea and so if you but that's that's the way subordination clauses art and and you'll see them in those kind of loans and you'll see farmers by the way I've had plenty of farmers or a couple of farmers say well the truth is it's not bad if you limit the amount that's in front of it it's bit of two hundred thousand maybe it's only a hundred times and so in that case you can't go too far wrong so that's a subordination clause y'all come back with me to page 279 and there's some other clauses we'll talk about and import there's another clause probably the most famous clause at all [Laughter] [Laughter] all right that's um that's the Santa Claus it's in almost all mortgages so actually mortgages but Santa Claus all more than one second anyway all right don't turn the page hop to the next page it says on page 280 principal and interest in parentheses it says debt service it says debt service which is a fancy word for mortgage mortgage payments for mortgage paid sophisticated investors call it debt services regular oil people call it mortgage payment but does everybody know that usually most of the time just not just about all the ways but very frequently when we make mortgage payments we pay principal and interest now sometimes we just pay interest but an equal amount of time we've paid principal and interest and that is in the second paragraph first sentence most mortgage loans are advertised loans you'll see that word now the word amortize literally means to kill or to extinguish so what happens is we typically usually make our mortgage payments principal and interest though that was not always true actually amortized loans were pretty much invented by FHA in the 30s when in the 30s prior to the 30s it was very common that people would borrow money to buy the farm and they would just pay interest interest interest interest so they w
uld borrow I don't know I guess five thousand dollars to buy their phone and they've been interest interest interest at the end of ten years the theory was the theory was that they were like putting some money away so they would have the $5,000 but the reality was at the end of the ten years they didn't have the money to pay it off so the bank would either allow them to continue paying interest or the bank would foreclose them and in the Great Depression the 30s bank ended up foreclosing on lots of people an FHA came along and invented the amortized which is very common today and we'll talk more about that in a later chapter and now now frequently frequently not all the time but usually we make our mortgage payments P i.t that's principal and interest taxes and insurance because the banks learned a long time ago that people have a hard time making their tax payment when the bill comes so here you are in your $300,000 house you're making your $1,500 a month payments everything's cozy with that but in September here comes that $2,500 tax bills it comes in September but it's not really due yet well let's hold off till October let's hold off November here comes Santa Claus and next thing you know our hero who hasn't made their payment and the bank figured out that's the problem so what they did years ago they invented what they call an escrow account what they do is this they take your $2,400 a year's tax bill and they say with your payments we want you to add two hundred dollars a month to your penalty and then in September when the bill comes the tax collector doesn't send it to me but they send it to the bank and the bank gives my tax bill and they pay my taxes and I don't have to decide between Santa Claus and making my tax pay which quite frankly I like this there's a lot of people that say I don't need the bank to collect my taxes well suit yourself like citizens everyone have that month all be now rolled into it yeah not all but a bunch a bunch and there are people that would go to the bank and say do I have to pay piti and the bank says no you've got great credit you're good customer you can just paint the United but for the most part someone FHA and VA they do but conventional loans if you said I don't want to pay the guy - yeah the bank would probably what's the asking for insurance insurance the same thing you gotyou insurance bill $600 a year and you know oh god I had a big lump sum and the bank doesn't want you to have to worry about it so they collect $50 $50 $50 two dollar insurance bill doesn't come to me it goes to the bank and they paid with my desk with money and now there's different types of loans fully amortise fix my phone and these are loans that require that you pay a constant amount to into the end of the term which by the way it off in 30 years into the term your balance is zero y'all know anybody that's ever made the last payment if you do get it I'm in my life and I sold it right there to you what I made my last payment so long mortgage right there in the same spot that's what you do that's what you do when you sell when I sell anyplace but I meant the 360 effect [Music] actually I assumed a mortgage one time it was 27 years old and the payments were like 80 bucks a month you said okay though I made the last payment and I forgot what the payments were over there like 80 bucks a month in like $72 it was was principal the interest was very little look like this is new but good it was back when assuming loans was common and this loan had been assumed ten or twelve times and it was 27 years old what I assumed so that's not usual oh that's very best not you now top of page 221 partially advertised fixed-rate mortgage this is partially advertised fixed-rate mortgage a lot of times you know interest rates are very low right now yes how many don't think they'll be low ten years well that's that's all the fact that's what the friend of one thing see that the interest on the market cannot go off and at the same time because everybody we afford to buy a house okay so right now the way how the board is taught how the mortgage on how the house is surprised going up the income is going to have to stay in article people to be able to purchase pro Naples Holy See that's what happened when the economy club that muscle will wind up in the same time you know nobody can afford it you know on boom everything club so they're gonna have to keep one day they gotta be good the race will go up eventually as of right now economy's not great no we're getting to know the next 10 years what did it kind of make looks like I don't see him skyrocket in any time so don't ask me for advice out today even if you ask me in 1981 think whoever seek 10 percent again Rachel never be that low again what you said is exactly right because if the economy's bad the only way we can get people to buy things is have interest rates below so if interest rates gosh what if interest rates were 10% today we'd be bankrupting this and y'all wouldn't be here most like when interest rates do start up lenders then we get tied up for 30 years so lenders say listen I think what we'll do we'll say at this house today will charge 4% interest okay that's good and we're gonna set you up on a 30-year amortization schedule and we're gonna set you up on a 30-year amortization schedule but here's the deal at five years from now you're alone is gonna be have a balloon payment a balloon payment in other words the whole thing's gonna come due so five years from now you're gonna have to pay that loan off now for a deal like that it's a flexible mortgage but would go for something like that how about a guy that's planning on moving in three years you know he's he's got a job maybe a military guy he's planning on and he's not gonna be here five years he knows he's not gonna be here five years so he might as well go for that deal four years from now sells his house he's happy camper that make sense yeah unless life changes change then well two plans but so his deal is he's gonna make payments for five years and this is called partially amortize because his balance stars out of the hundred and it goes down to say 95 in five years and when there's a there's a balloon they come with a balloon and of course that's actually that's not even a swing where that's an official word but they call it a balloon payment because when you get a mortgage with the boom and when you go to the closing they give you this little pill to swallow that it's about the size of a garden pea and you take that pill and it goes down into your lower digestive tract and it's got a time release mechanism that's tied to the wound pendant so if you have like a five-year balloon about four years and six months later it starts to inflate and it causes a slight discomfort and it gets bigger three months before that one can paint with this dude and I'm month before that favorites' do you can't think about anything but that balloon payment and then when you go ahead and pick it off they give you this little pill to swallow that punctures it lacks detail that might not be the reason you know I joke about that but you know please if you don't take any of my advice take this advice don't ever get a balloon thing because if you've ever had anybody who ever had one if you did you would believe that story I just told you were saying I know that's true why come on friend of mine down in um in Cassadaga Florida I'm gonna Cassadaga you know Cassie I don't know yesterday well next time you go to Florida go to Cassadaga and then don't turn your fortune it's like god it's anybody captive David don't write that down visit that cancer thing and they tend to go to Florida and he was in Cassadaga and he was gonna buy the house next door to him he called me up for advice don't you love it when people call you for advice and he's gonna get the owner to hold mortgage and I said don't get a movement he said why not I said oh and I told him this story he said ah that's not down you think he took my advice they don't know he got up on the pavement they haven't moved in 10 years 10 years guess what year that happen 2006 2006 I was over in his house in 2011 for dinner and guess what he wanted to talk about coming out pretty soon pretty soon that's five years from now but it's already on his mind in the back over there about to 13 I got a phone call from another day I wouldn't take a call because I knew what actually I did talk to him about a month ago he told me sir I got that property for me I said you did yeah it was a miracle I did it because it was an old house built in 1910 it was a miracle that he did when he had a reason is but stay away from balloon payments alright next thing simple interest and principle you don't have compute interest did you say yes say yes yes did you say yes yeah did you say yes you go an amount of money on an industry did you say yes where'd you learn this you might have teach it y'all ready right you gonna borrow thousands of dollars on your Visa card and the interest is 18% question is how much interest we paid a year so is the thousand dollars times eighteen percent is $180 so interest equals thousand dollars principle principle principle times what we call this great-great-great and and time is always a factor so the formula for interest is interest equals principal times rate times and that makes it principal times rate times time I saw what you learned that government where you learned it I learned in eighth grade at Margot junior high but our our teacher gave us this little memory pack i / p RT now this is a formula interest equals defendant archive T this is just a memory there but anytime you're looking for any of these things if you will take this memory interest is what else whatever I told you I paid a hundred and eighty dollars interest last year on my visa bill which I owe $1,000 them can you figure out my interest rate did you say yes yes yes let's try what's the forward the formula is rate equals over DT is that right that's the formula we got later 6.18 we put the thousand dollars in there times one year dollars in interest and the calculator says 118 everybody good yes cookie did the same thing if I told you I if I told you I paid 18 percent interest which was $180 on my visa bill last year and the question is and the question is how much do I owe visa or mother is the equals over RT I pay 18% interest for one year last year I paid $180 calculator says everybody good now top of page 281 [Applause] okay top of the next page page 282 it mentions usury don't see that word anybody that what user he is yeah do you say yes yeah yeah you said yes we have this I'm like you've got an example there okay yeah all the time around stuff in military base yeah how's that well you always got some some guy has a little better off than others that all be willing to loan you X amount of dollars to go off for the weekend as long as the next pay that come to you pay it back plus X amount of dollars in return I assume the X to the second X is length yeah a little bit much a little bit more than a letter by yeah is that legal no no but it ends up yeah like a long to use a long sharp yeah okay loan sharks are you because what user is is charging more interest and then allowed by law it's charging more interesting so look at the young as usual on to state laws and federal laws that thing where it says the little break boxes in North Carolina what does it say no karate exhibits all residents or first deeds of trust and a duty did you owe me the question why would North Carolina exempt first mortgages first deeds of trust from Ussuri those well now by the way this is hard to imagine today because interest rates are three and a half four percent today but remember I told y'all about the bad old days and y'all should have been there they were such a good times interest rates were thirteen fourteen fifteen percent the highest longmeyer closed for a customer was at fifteen percent in fact we used to we used to practice standing in front of a mirror telling people how much their payments were and what we try to do is tell them without flinching fifteen hundred dollars no I don't want to square feet I want there's only a thousand square feet the pavements fifty but think about this think about this it just rates across America in just rates across America are 13 14 15 percent well what if North Carolina how to use real office as you can't blow money and over 12 percent what's going to happen nobody is gonna loan money in North Carolina by the way Texas had a 12% usury rate in 1980 and they quickly did away with that because they were they were out of business the whole states out of business nobody's blowing any money because you know let's go somewhere where we can charge fifteen six David but at that time it was 18% in Florida and and and the rates actually got beyond eighteen percent and it was a good time been there so you definitely learn how to sell you learned how to tell people their payments even if you didn't have to practice it in front of a mirror anyway but that's the reason oh speaking with the good old days let me give you a little history lesson about discount points who's heard of discount horses let's see okay very peanuts well here's we discount point work and once again let's go back to the old days when I started selling real estate FHA and diem rates were controlled by Congress Congress says FHA if you get an FHA loan mister lender you cannot charge more than seven percent well at that time interest rate for seven a half maybe percent well wait a minute let me get this straight Congress says you can't charge more than seven percent mr. buyer wants to get an FHA loan with a very small down payment or mr. veteran wants to get a VA loan with no death penalty mr. seller would like to sell his house to one of these people but Congress says can't charge more than seven percent well okay what's going to happen nothing's going to happen that lenders not going to make that FHA or VA loan so what happened was they invented discount points Bo and these were invented way back in the forties they said listen we'll all that money to mr. veteran will loan that money to mr. Vito a small down payment yeah mr. seller if you will pay us some discount points how much well they had this formula they came up with back then they had this formula that says for every discount point paid and here's what a discount point is you go out tomorrow back in those days forty thousand dollars so you are forty thousand dollars and the lender says we want a seven and a quarter percent yield on the loan you know from you that word yield in financial terms it's basically the rate of return problem you don't say yes yes so we want a seven important to you but the law back in the seventies says you can only charge seven percent okay well they came up with this formula that if you paid one point which is one percent it will increase EAL by one 8% what we want to increase the deal by one quarter of a percent does everybody understand that one quarter is to eight lowest common denominator so mr. Lindner says if you pay us two percent in cash how much money is that eight hundred I will own your customer money at seven percent now this has been going on through the 40s the 50s the 60s to 70 in the early eighties they could have in Congress control of FHA VA rates today they're just controlled by the by the market and so so today it's controlled by the market so what happens is the market says you can turn any rate you want to what lenders got so used to charge them they just keep on turning and people keep on paying young with it they've been going on forever so they say okay you want to borrow money at 3% we can do that if you'll pay two points cash upfront so and today these are paid by the buyer the seller whoever agrees to innovate so fire pays the $800 to the lender he loans them the money at 2% bed and what seems like a bargain rate they don't with me are you sure the next thing we need to talk about is advertising a mortgage the next thing we need to talk about is advertising a mortgage and this is where we take a mortgage with a payment and we figured out what the balance is after one hour two things let me take your wine we need to learn this you know curricula I
m wrong but some of y'all kind of have an attitude that I only want to learn what's on the test and the only reason I want to learn it is because it's on the test but you know there's so many things in this class that you think I don't see where there's being relevance to that but it's a funny thing about this this was on the exam when I took it 100 years ago I remember learning in class I was out one day showing houses to this young color this is probably about 15 years ago and they were young couple they were looking at a hundred and forty thousand dollar houses they had thirty thousand foot so we're out of the houses and you know when you're looking at houses picked up about if it's 140 or 240 or 340 or 440 it's the same old story every time you go look at houses and they always say yeah I wish it was a little nicer I wish the bedrooms were bigger publish the yard with I wish the house was a well it would be if you mortgage was bigger but I was out showing houses the shook up well then I would listen to that all identity about 2:30 in the afternoon pulled up in front of this house this is a realtors delight yelping me with the word turn repeated nip did this house have curb appeal I mean it was just gorgeous it was one of these ranch-style houses had double doors had two pecan trees in the front yard which a very unusual family and we're sitting there you sure this house is only one floor I'm looking at the thing I said yeah it's 140 man this is nice looking at it I said let's go inside so it was empty we walked up to the front door and we walked up the front door had double doors I tell me that whenever I show identity house with double doors I like to just throw the doors open I have my multi lock key you know throw over these double doors holy moley this thing was prettier on the inside than it was the outside it had this big Chattahoochee block chimney in a living room it had this dining room over there with double French doors going out to a patio that had this beautiful waving view as a couple standing there they go to walking down to the master bedroom they go walk into the master bedroom understanding their beautiful set of French doors that same gorgeous view out the back and they're standing there this is a lot of salesmanship class but this is called so they're standing there citron we like this any guy said Ron can I ask you the question which by the way this is not a selfish in class but when people ask questions that's the box it they don't ask questions but I was little like is it Robin actually when she wasn't sure he said you said that if we put $30,000 a day and we got a hundred and ten thousand dollars you said interest rates are seven and three quarter percent he said seven hundred eighty seven he said run can you tell me what my balance would be after one and eight and I thought to myself yeah get a calculator do you mind I said enough so what out the car I'm sitting there doing this arithmetic and thinking to myself this is why they put this on the State Exam you just never know well we got our Foreman on the board multiply divide subtract subtract you don't have me out here how much did I say they're borrowing under $10,000 times the rate what does this number look like as a decimal fraction what 7/7 5.05 right is that right y'all know that that's basic arithmetic so we're going to multiply the principle times and rate oh yeah and what's the name of that number annual interest but we don't care about the annual interest we want to know about monthly interest so we're gonna divide that by 12 what are we going to get Oh set of 10 no change for to what's the name of that them my entrance monthly interest so this is the monthly interest is that right step next our pavement is $787 month - you go into our this $787 one is a baby we're going to subtract from that the seven hundred and ten dollars whether the payment is principal and interest is that right is that right yeah did you say yes this is how we figure out how much for payment or this is how this is how we figure up now how much their payments are how much of their payment is going toward interest how do we figure out how much dependency well for our purposes in this illustration is given in the question but in real life y'all come with me over to page 324 you'll see this chart and page 324 you'll see that so
