The Truth About Mortgage Loans

The Truth About Mortgage Loans by Doris Dobkins When you close on a new mortgage, the loan papers state the interest rate you will pay for your loan. But is that interest rate really as good as it seems? From your monthly payment that you faithfully make each month, you know what that amount is actually going towards interest? During the signing of your loan documents, you may have noticed a large sum disclosure (about three times the size of the loan), which indicates the amount of interest and principal you pay for the entire duration of your loan? For example, if you have a 30-year fixed mortgage for $ 100,000, more than 30 years, which would have paid about 300,000 $ per lender. Only 1 / 3 of that money is actually what you borrowed. Most of the hard earned money is actually interest payments. To verify this for yourself, take your current monthly payment you make to your lender (principal and interest only) and multiply by 360 for a loan of 30 years and we 'll see the total payments your lender would have received more than 30. This enormous sum of money in interest is going to someone else. This is money that should work for you and build wealth. Do you really want to work three decades to give your lender a large chunk of your hard earned money? Here's another piece of information that is even more important. How often do you move? In America, the average person moves every 7 years. I do not know about you, but when more people move into a new house, get a mortgage again and go right back to payments where 90% of the amount going towards interest. If you're average, you will probably never pay a house in your life unless you become aware of how the currency. And one of these days, it might be too late. Think of it this way. If you have a 30-year fixed, $ 100,000 loan at interest rate of 7% and 5 years after you move, you will still owe 94% of the original loan or $ 94,000. Of the thousands of dollars that they paid more than 5 years, you will only have reduced the capital to be $ 6000 because most of your payment for the first 5 years goes towards interest. After 10 years of payments, (120 payments) you would still owe about 86% of the balance of your mortgage. It takes literally 20-25 years of mortgage payments just to reach the threshold of 50%. If you're one of those people who do not prepay your mortgage, because it is the last tax shelter, think about what you are really doing. You're paying a dollar of interest to return 28 cents in tax deductions (or whatever your tax rate). This is called "cash flow negative." Another reason I heard for hanging on a mortgage is that people prefer to use the money to invest and obtain a higher return. First of all, this is not an apple to apple comparison as we have a guaranteed rate of return and the other is not. There is no guarantee with other investments, as with paying a mortgage. All boils down to risk. Yes, you can go ahead in some investments, but are not guaranteed. If your money was on the stock market right now, paying the mortgage would probably have given a higher return you are getting now. So what's the solution? Pay extra on your mortgage and get paid in advance! Even one extra payment a year will remove about 8 years from a loan of 30 years. You have a plan to be free of debt? No matter your income or expense may be feasible for you. Know where you are now, identify where you want to be in 5 years and make a plan to get there. Start the debt-free plan for today includes a loan and build your wealth for the future, not someone else. ** * *** *** *** *** *** Doris S. Dobkins, is an expert on saving money and the author of the book just published: "Refinance Secrets Revealed", which is guaranteed to get you out of debt by seniority with a zero cost loan. Check it out if you have a mortgage between $ 130,000 and $ 300,000, because you're the perfect candidate to take advantage of a loan at no cost. http://www.RefinanceSecretsRevealed.com