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Mortgage & Refinancing Information |
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Total Cost Of Credit vs Monthly Payments
I read a press release the other day which points to the fact we need to be very careful with our finances. The subject of the release was home mortgages. A company was announcing the availability of 40 year mortgages for its customers. The stated purpose was to lower the monthly payments to make buying a home more affordable. Whenever I hear the phrase "more affordable", I put my hand on my wallet because the attempt to empty it will begin any moment. Almostnever is that phrase used in relation to the total cost of financing. It isalways used in reference to the size of the monthly payment, as in this example. Let's see what it really means. I did the math. A mortgage for a $100,000 home at 6% for 30 years would have a monthly payment of about $600 for principal and interest. You would pay about $216,000 over the life of the loan of which $116,000 would be interest.. A mortgage on that same home for 40 years would be at 6.25%, with a monthly payment of $565. The payments over the life of the loan would total about $271,200 and $171,200 of the totalwould be interest. The forty year mortgage has a higher interest rate (usually between.25 and .50 percent) because the lender has his money at risk for a longer time (Lenders are well aware that time is money. You should be as aware). This higher rate coupled with the extra ten years of the loan, has the borrower paying 47% more interest, or $55,000 more over the life of the loan. Even with a lower payment that supposedly makes it more affordable to purchase that home. Sounds like a pretty good deal for the lender. Another problem the borrower faces is building equity muchmore slowly in the beginning of the loan. The extra interest expense paid for the extended length of the loan prevents equityfrom building up quickly. All of this for a monthly payment that is only $35 less. You need to think in terms of overall cost and not just monthly payments. The total cost is what you will give back to your creditors. The focus on the monthly payment takes attentionaway from the total amount to be repaid. You need to look at this with any indebtedness, car payments, personal loans, credit cards: figure the total cost, not just what you pay each month. You'll begin to hear more about these loans I'm sure. Think long and hard before you lengthen your indebtedness. The goal is to become debt free and to do it as fast as possible. Advise your families and friends to do the same. David Wilding works with indiviuals and groups to help them get rid of debt. For the past ten years he has attempted to change attitudes toward and acceptance of personal debt. Visit his website http://www.debtattack.com for more ideas, tools, and strategies to become debt free.
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Today’s mortgage refinance rates are rising, but they’re still under 3% — for now | April 13, 2021 Fox Business Today's mortgage refinance rates — one key rate rises while others stick below 3% | April 12, 2021 Fox Business Today's mortgage refinance rates see little change as market holds steady | April 1, 2021 Fox Business Today's Mortgage and Refinance Rates: April 18, 2021 | Rates Swing Business Insider Today's mortgage refinance rates keep rising — one key rate hits 3% again | March 30, 2021 Fox Business Today's mortgage rates inch up from record lows, but refinance rates still a great deal | April 15, 2021 Fox Business Today's Mortgage and Refinance Rates: April 3, 2021 | Rates Bump Up Business Insider Refinancing a home equity loan: Why and how to do it Fox Business 5 ways to identify mortgage refinancing scams FOX 5 Atlanta Today's Mortgage and Refinance Rates: March 27, 2021 | Rates Slip Business Insider UI Says HARP 2.0 Could Help Pandemic-Era Borrowers Mortgage News Daily Top 3 Borrower Motivations Driving Surge In Refinance Loan Volume Digital Media Solutions Fitch Assigns Saudi Real Estate Refinance Company First-Time 'A' IDR; Outlook Negative Fitch Ratings VA Construction Loan Guide | Requirements & Process 2021 The Mortgage Reports HFA Loan Guide 2021 | What is an HFA loan? Who qualifies? The Mortgage Reports How to calculate commission income for your mortgage The Mortgage Reports Saudi Real Estate Refinance Company -- Moody's assigns first time ratings to Saudi Real Estate Refinance Company Yahoo Finance Mortgage Refinance Options & Types | Refinance Chase News & Stories The 2 Big Reasons We've Stopped Making Extra Mortgage Payments The Motley Fool Best mortgage refinance lenders in 2021 Bankrate.com Today's mortgage refinance rates push further into record low territory | January 28, 2021 Fox Business 3 signs you should refinance your mortgage right now Fox Business Today’s mortgage refinance rates hold steady for third consecutive day | December 11, 2020 Fox Business Today's mortgage refinance rates stable, one key rate still below 3% | February 24, 2021 Fox Business How do I get the most out of my mortgage refinance? Fox Business The Best Mortgage Refinance Lenders of April 2021 Business Insider Today's mortgage refinance rates stop rising, hover near historical lows | March 16, 2021 Fox Business Today’s mortgage refinance rates mixed — one key rate drops while another rises | March 2, 2021 Fox Business Today's Mortgage and Refinance Rates: February 8, 2021 | Rates Up Business Insider 15-Year Mortgage Refinance Rates for April 2021 NextAdvisor Can refinancing a mortgage hurt my credit score? Fox Business Everything You Should Know About The New Mortgage Refinancing Fee That Goes Into Effect Dec. 1 Forbes Current 30-Year Refinance Rates for April 2021 NextAdvisor Retiring with student loans? What to do first Fox Business |
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