This is one thing thats always pondered me so far. As I have never went through the …pleasure… of having a mortgage; what happens to the mortgage is the person decides to sell the home? I’m pretty clueless here
The mortgage either gets paid off or assumed by the buyer.
how is interest calculated on a mortgage? more specifically the APR.
Interest is calculated on the outstanding loan balance. loan balance x (loan interest rate/12) = monthly interest expense. Please note that this formula does not include amortization or principal reduction of the loan balance.
APR or annual percentage rate is a slightly different animal, taking into account the cost of obtaining credit. It includes certain loan fees which are included in the interest rate to create an apples to apples comparison between lenders. It is something required by the federal government to protect consumers.
I would suggest you find a couple of good basic finance books and read them cover to cover.