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FIB - Scams 101
Re: I had to look it up....
Posted By: Jim G In Response To: Re: I had to look it up.... (Michael J McMillan)
Date: Tuesday, October 30, 2007, at 4:21 p.m.(pst)
In Response To: Re: I had to look it up.... (Michael J McMillan)
OK, Boys and Girls, here's how it works.
This is an amortization table. (Ya get it with yer mortgage. If ya don't, ya should ask for one)
Interest Princ Bal
1 $1,083.33 $180.80 $199,819.20
2 $1,082.35 $181.78 $199,637.42
3 $1,081.37 $182.77 $199,454.65
4 $1,080.38 $183.76 $199,270.89
5 $1,079.38 $184.75 $199,086.14
6 $1,078.38 $185.75 $198,900.39
7 $1,077.38 $186.76 $198,713.63
8 $1,076.37 $187.77 $198,525.86
9 $1,075.35 $188.79 $198,337.07
10 $1,074.33 $189.81 $198,147.26
11 $1,073.30 $190.84 $197,956.42
12 $1,072.26 $191.87 $197,764.55
In this example, somebody paid $250,000 and put 20% down. Leaving $200,000 to
As you see, your payments at the start are almost all interest.
If, on your first $1264.13 PI payment, you include the next payment's principle (181.78) you will, ON PAPER, save $1,082.35. (NB: the payment does not include taxes and insurance)
You, of course, must make your next ($1264.13 payment next month. But then you're at line 3. If you make an extra principle payment again (183.76) you save ON PAPER $1,080.38. And so on through the life of the mortgage.
If your budget allows you to keep doing that, you'll be finished paying somewhere around the half way mark of the 30-year mortgage.
As has been stated before, though, many if not most folks sell long before they get to that point....and start all over again with another, usually higher mortgage. Except in the case of empty nesters.
As you see mortgage interest is simple interest. The amortization table you get from your bank or mortgage company makes it quite simple to see where you are at all times...how much you're saving...and how much you still owe the piper.
The above is not guess work. It's based on personal experience. That is - it's exactly what this home buyer did. Didn't need any software...or rocket scientists. Just a piece of paper known as the amortization table. And THAT
didn't cost a dime.
>> ....I got curious so I looked up HELOC. It's a version of an
>> Adjustable Rate Mortgage (ARM) which have their own troubles right about
>> now. Take a good look--- a lot of the foreclosures you're seeing in the
>> news is happening because ARMS adjusted up, increasing the payments that
>> have to be made substantially. A budget that could afford the house at the
>> old rate suddenly finds itself bursting under the new rate, and unless the
>> homeowner can find new income or dramatically cut his/her budget elsewhere
>> foreclosure becomes all but certain.
>> Now that I've looked it up, this scheme scares the bejabers out of me.
>> Paying thirty five hundred dollars for software that gives me the ability
>> to get myself in big trouble down the road-- I think I'll pass.
>> Jeezz, and they accused Reagan of "Voodoo Economics".
Messages In This Thread
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