This little known mortgage requirement is one that most Fairfax VA home owners don’t understand, and one most bankers don’t advertise. However, if you do it right, bankers will have to execute it for you.
After obtaining a mortgage, your monthly payment is actually made up of four items:
- Principal – the amount you borrowed and will have to pay back.
- Interest – loan interest.
- Taxes – annual real estate taxes paid into the monthly escrow account.
- Insurance – annual hazard insurance policy also paid into the monthly escrow account.
Almost all of the initial payments count towards Interest. This is called a front-end loaded mortgage or standard amortization schedule. Over 30 years or 360 months, $1,264.14 every month means a total of $455,090, which means you’d pay $255,090 in just interest alone.
About 85% of the initial monthly payments will be purely mortgage interest, with about 15% going toward reducing the principal of the amount you originally borrowed. That’s $1,085 in interest, and only $180 toward the principal. Seems very self-defeating, right? Next month won’t be any better, as the interest portion will go down by about a dollar, while the principal reduction goes up a dollar.
This process continues throughout the mortgage, and with a standard 30 year mortgage, the original amount of $200,000 you borrowed won’t even be paid off half-way until the 22nd year.
So how can you save thousands of dollars on Fairfax VA homes for sale? Find out on Part Two of this powerful “Insider” strategy!
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Thierry is a Real Estate Agent at RE/MAX Premier, and Host of Talk Radio’s, “Inside Real Estate”Thierry & his team Guarantee a $25,000 minimum savings for Northern VA Homebuyers by applying his unique insider techniques & strategies that he discovered throughout 8 years of exclusive Radio Interviews & Insider Access to wealthy Real Estate Insiders, Investors & Top Industry experts.
Phone: (703) 222-6714.
Thierry@ThierryRoche.com
Copyright 2010 Inside Real Estate, LLC. All Rights Reserved.
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