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Why You Should Not Get Hung Up on the Interest Rates!!
This is what a mortgage can do for you!
And why you shouldn't get hung up on the interest rate!
Let me show you the bottom line or the total dollar amount you will pay when paying a mortgage and paying rent and what the benefits of a mortgage are:
Let's say John bought a home and has a $75,000 mortgage @ 10% interest for 30 years on his home with a payment of $750.00 per month. John's friend Bill is renting a house, but he is paying $750.00 per month in rent with no interest (I am using these numbers for illustration purposes). Now, it's a funny thing, but both men live in their homes for the full 30 years and guess how much money both paid out in that 30 years?
Do you think John would have paid more money in the 30 years then Bill did because John was paying a mortgage? The answer is no! Thirty years equal 360 months of payments and if you multiply 360 X $750.00 you get $270,000.00. That means both men paid the same amount of money over the 30 years with one BIG difference! John now OWNS his home but Bill is still paying rent and does not own the home. In fact Bill's rent more then likely paid the mortgage off for the owner of the house he is renting from.
As you can see, even though John was paying a mortgage payment of $750.00 per month, the total amount of dollars paid in the same time period of 30 years is the same. Now Bill has nothing to show for all the rent payments he made except for 360 rent receipts. So you can see how the interest rate does not change the total amount paid over the time period because $750.00 per month is $750.00 per month. No matter what you call it a mortgage payment or rent payment, the bottom line is the same.
So whatever type of mortgage you can qualify for has to suit the payment you can afford and are comfortable with. Of course; the amount of money borrowed, the interest rate, and the term or years the money is borrowed is what will determine your payment.
So the bottom line is: if you get a mortgage that is comfortable for you payment wise... let's say equal to what you were paying for rent, the major thing you changed is the fact that you own the home now and you are not just paying rent or paying off someone else's mortgage.
You know the bottom line is we all have to live somewhere and we have to pay for that living space, so why not own what we have to pay for anyway. And don't get hung up on the interest rate to where it stops you from buying your home... just make the payment amount work for you.
Now let me show you what you can do with a mortgage payment that you can't do with a rent payment.
Stay with me now because it is going to get really good! As you have seen from our example above, the total amount of money paid over the 30 years or 360 payments for the mortgage and rent came out to be the same dollar amount in the end. However, did you know you could change the bottom line or the dollar amount paid when you are making a mortgage payment as well as the amount of time it will take to pay the money back?
A mortgage is calculated by the amount of money borrowed, the interest rate, and the amount of time it will take to pay it back. This calculation is called an amortization schedule. I am going to show you an amortization schedule for a mortgage now and show you how to change the total amount of money you will pay and the amount of time it will take to pay it back! Lets say you get a mortgage for $75,000@12% for 30yrs This is what the amortization schedule will look like:
Date -- Payment -- Interest -- Principle -Balance 1-2/21/04 $771.46 $750.00 $21.46 $74,978.54 2-3/21/04 $771.46 $749.79 $21.67 $74,956.87 3-4/21/04 $771.46 $749.57 $21.89 $74,934.98 4-5/21/04 $771.46 $749.35 $22.11 $74,912.87 5-6/21/04 $771.46 $749.13 $22.33 $74,890.54 6-7/21/04 $771.46 $748.91 $22.55 $74,867.99 7-8/21/04 $771.46 $748.68 $22.78 $74,845.21 8-9/21/04 $771.46 $748.45 $23.01 $74,822.20 9-10/21/04 $771.46 $748.22 $23.24 $74,798.96 10-11/21/04 $771.46 $747.99 $23.47 $74,775.49 11-12/21/04 $771.46 $747.75 $23.71 $74,751.78 Totals $8,486.06 $8,237.84 $248.22
As you can see, when you make a payment on a mortgage a large part of the money goes to interest with a small part of the money going to principle. You will notice the principle balance increases with each payment and the interest balance decreases with each payment, but this happens very slow.
Now, let me show you what control you have over a mortgage:
As you can see; in the 11 months of payments we made on this mortgage, we paid $8,237.84 in interest and $248.22 in principle! This is what YOU can do. When you looked at this schedule after your closing, you noticed the figures. If you were to add the total of the principle for the 11 months of payments ($248.22) to your first mortgage payment and told the lender you wanted the extra money to go towards the principle this is what would happen for you: you would reduce your mortgage by 11 months and save $8,237.84 in interest payments! This happens whenever you make extra payments on a mortgage, no matter how much or little you pay. You always have to specify that this extra payment is designated to go towards the principle and this works best if you start right away in the very beginning of the mortgage!
This means that in your first month you have already changed the total amount of money and time it will take to pay back your loan. The more you can do this, the less money you pay in interest and less time it takes to pay the money back.
The mortgage has to have no pre-payment penalties. That happens to be the majority of mortgages that we see today. However, ask and make sure so that you have no surprises later. This is just one simple thing you can do with a mortgage which gives you control of the bottom line as far as money paid back and the time it takes to pay it back.
MORE RESOURCES updated Wed. September / 23 / 2020
Refinancing Your Mortgage Is About to Get More Expensive The Wall Street Journal
How to refinance your mortgage in 5 easy steps Fox Business
A record number of borrowers can now save on a mortgage refinance, as rates set another historic low - CNBC
A record number of borrowers can now save on a mortgage refinance, as rates set another historic low CNBC
Mortgage lenders are adding the refinancing fee. You can still avoid it if you act now. - Bankrate.com
Mortgage lenders are adding the refinancing fee. You can still avoid it if you act now. Bankrate.com
How to refinance your mortgage without closing costs Fox Business
How often can you refinance your mortgage? Fox Business
Mortgage and refinance rates today, September 15, 2020 | Mortgage Rates, Mortgage News and Strategy - The Mortgage Reports
Mortgage and refinance rates today, September 15, 2020 | Mortgage Rates, Mortgage News and Strategy The Mortgage Reports
Refinance your home before December 1 to avoid paying a new fee Business Insider
How and Why to Refinance Your Mortgage: A Step-By-Step Guide ActionNewsJax.com
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Complete Checklist of Mortgage Refinancing Requirements Credible News
Today's best mortgage and refinance rates - Tuesday, August 25, 2020 Business Insider
What to consider when retiring and refinancing your home Washington Post
Clark Howard’s Special Rule for Refinancing Your Mortgage Clark.com - Clark Howard
Debunking Key Mortgage Refinancing Myths TheStreet
15-year mortgage rate hits new record low Bankrate.com
Buying or refinancing a home during a pandemic NBC 15 WPMI
Millennials drive huge VA home loan refinance boost in Hampton Roads - The Virginian-Pilot - Virginian-Pilot
Millennials drive huge VA home loan refinance boost in Hampton Roads - The Virginian-Pilot Virginian-Pilot
What You Should Know About Non-Bank Mortgage Lenders The Motley Fool
New Fed policy could mean years of low mortgage rates | Mortgage Rates, Mortgage News and Strategy - The Mortgage Reports
New Fed policy could mean years of low mortgage rates | Mortgage Rates, Mortgage News and Strategy The Mortgage Reports
Pontiac's United Wholesale Mortgage to go public with Gores Group The Detroit News
Refinanced Your Mortgage? 8 Things to Do With the Savings The Motley Fool
The Median U.S. Home Value Has Reached a Record High -- and That's Bad News for Buyers - The Motley Fool
The Median U.S. Home Value Has Reached a Record High -- and That's Bad News for Buyers The Motley Fool
Mortgage refinance: Everything you need to know Fox Business
How to get the best mortgage refinance rates Fox Business
10 things to know before refinancing your mortgage Fox Business
When should you refinance your mortgage? Fox Business
Colliers Mortgage Closes Fannie Mae Loan for Acquisition Financing of 129-Unit The 10Forty8 Modern Living Community in Seguin, Texas - MultifamilyBiz.com
Colliers Mortgage Closes Fannie Mae Loan for Acquisition Financing of 129-Unit The 10Forty8 Modern Living Community in Seguin, Texas MultifamilyBiz.com
Compare Today's Mortgage Refinance Rates: Sep 22 Credible News
Why Warren Buffett would say to refinance your mortgage now Wall Street Reporter
Mortgage refinancing is about to get more expensive Pittsburgh Post-Gazette
How to get a low-cost mortgage refinance Bankrate.com
How does mortgage refinancing work? Bankrate.com
10 ways to save money on a tight budget Bankrate.com
Refinancing Your Mortgage? Those Rock-Bottom Interest Rates Aren’t for You - The Wall Street Journal
Refinancing Your Mortgage? Those Rock-Bottom Interest Rates Aren’t for You The Wall Street Journal
Should you refinance your mortgage? Tennessean
2021 Mortgage rate forecast predicts a rise to 3.3% by 4Q 2021 National Mortgage News
Mortgage refinance applications spike 79% as homeowners rush to take advantage of lower rates - CNBC
I refinanced my mortgage during COVID-19, and thanks to low interest rates I'll save about $50000 - Business Insider
I refinanced my mortgage during COVID-19, and thanks to low interest rates I'll save about $50000 Business Insider
Rushing to Refinance Your Mortgage: 6 Tips and What to Avoid The New York Times
Refinancing your mortgage isn't always the right move — here are 6 reasons to hold off, according to a loan officer - Business Insider
Refinancing your mortgage isn't always the right move — here are 6 reasons to hold off, according to a loan officer Business Insider
What Is a Mortgage? Everything to Know About Home Loans Credible News
The basics of no-closing cost mortgage refinancing Fox Business
Should I refinance my house? Mortgage rates drop to 50-year low as coronavirus spreads across the U.S. — and the world - MarketWatch
Should I refinance my house? Mortgage rates drop to 50-year low as coronavirus spreads across the U.S. — and the world MarketWatch