Subject: How Interest Rates affect your Monthly Mortgage

Why do lenders give money to borrowers and let them pay it back
within thirty years? I mean, aren't they out all of that money
until you pay it back?

How do they benefit? Well, to be honest, lenders are not just lending
you the money; they are selling you the money.

They make a profit off of that money by charging interest on it.
The interest you pay on your principle is what it costs you to
borrow that loan.

And if you actually calculate out how much money you pay in interest
over the lifetime of your loan, you would see that the lender is
getting a pretty sweet deal.

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Its not unusual that you pay 1.5x of the amount of the initial
principle toward the interest by the time the loan matures. Ouch!

This is why it is important to reduce the amount you pay on
interest as much as possible.

You should put as much of a down payment on a home as possible,
shop around for the lowest interest rates, pay as many
mortgage points as possible when buying the home, and try to
finance your home over a smaller period of time.

It's a lot of money up front and may raise your monthly payments by
one or two hundred dollars if you finance for 15 years instead of
30, but you save yourself several thousand in the end.

For home buyers who are unable to invest a lot of money up front,
you should be sure to shop around for low interest rates and special
loans or interest rates that may be offered for your circumstances
such as VA loans or rural assistance loans for farmers.

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Also, for those who finance a 30 year mortgage, consider making
arrangements to pay above the monthly mortgage so that you pay
down the principle faster.

Another way to reduce interest is to consider refinancing your home
if interest rates decrease at least 1% below the current
interest you are paying on your mortgage. It will make a
significant difference.

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Thank you,

Max Taylor
http://taylor-marketing.blogspot.com