Buying A New Home And Understanding Mortgages Part 2
How The Interest Adds Up
While the financial aspect of everything can get a bit tricky then end result is that when you have a bank or mortgage company carrying your loan you will pay a lot more for your house in the long run. So the house that you originally bought for $400,000 will actually cost you a whole lot more money than you think. Factoring in your $10,000 down payment you now owe a balance of $390,000. If you get a 30 year note at 5.0% and take the whole 30 years to pay back the original $390,000 with no extra payments or anything you will end up paying $753,697.56 for your home. That is a total of $363,697.56 in interest payments alone.
How You Can Save More Money
While the above figures may appear to be very depressing and discouraging, there are a few things that you can do to save some money when you are repaying your mortgage.
The Good News
It is not all dismal. The good news is that the more money you are able to pay, above and beyond your regular monthly property payment, the more money you will save. Making any extra payments, however small and shabby they may seem to you, can make a huge difference over the overall repayment amount.
Lets first look at your down payment. The more money that you are able to save up and pay for a down payment the better off you will be financially. We can see this in detail when we use the previous figures of a home for $400,000. By putting down a $10,000 down payment on the home you will have saved $19,325.58 over the course of the loan versus having no down payment.
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Tags: buy, home, mortgage, mortgage agreement, new home, Property, Property Options, property options blog
April 7th, 2009 at 6:19 am
[...] far we have looked at the amount of money that is paid out over the life of a home loan and how making a good sized down payment can help reduce the overall amount of money that is repaid [...]