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Your Mortgage
Understanding your mortgage payments-The Amortization Schedule
A mortgage is the most expensive item in your family budget. Most consumers are not aware of how mortgages are set up and therefore do not realize the importance of paying the mortgage early. An "Amortization Schedule" is a breakdown of each payment into principle and interest. It shows how each payment is applied to reduce the principle amount owed. You should have received a full schedule on the day of closing from your closing agent. A mortgage is always set up by the bank to pay the interest FIRST and then the principle or the amount borrowed. So, in the early years of the loan MOST of all the money you pay monthly goes to the interest...AND not to the Principle. Look at the partial amortization of our example of a $100,000, 7.0% 30 year loan assuming the mortgage was originated in the year 2010.
1. In the first payment of $665.30, $81.97 was applied to the principle and $583.33 to the interest.
2. After 12 payments of $665.30 you have paid a total of $7,983.60 BUT only $1,015.81 was applied to the principle and the balance of $6,967.82 to interest.
3. After 5 years of payments, 12 x 5 equals 60 payments, you have paid $39,918.00, BUT you still owe $92,691.55.
4. In the year 2020 after 10 years of payments, 10 times 12 equals 120 payments, you have paid $79,836.00, BUT your balance is still $83,770.95.
5. At the halfway point of 180 payments in the year 2025 you have made 180 payments of $665.30 or $119,754.00, BUT you still owe $71,124.88 of the original $100,00 you borowed.
Only in about the 17th year of the loan does the accounting turn around to pay more to the priniciple and less to the interest.
Is this what you had in mind when you purchased the home? You must start to accelerate the loan NOW in order to combat this untenable scenario. If you begin to reduce the mortgage now you could save as much as 84 payments provided you begin in the first month of the loan period.
In order to save thousands you need not increase the monthly payment, therefore it doesn't costs you more each month in order to utilize The Mortgage Reduction Plan.
Order your plan today!
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Your Equity
The equity in your home is another most important element in ownership. Equity is defined as the amount over and above any mortgage balance owed less any applicable sales charges in connection with the sale of the property. Equity may also be defined as "Appreciation" or value. Your home should appreciate by national average about 5-8% each year. Look at the following chart of appreciation buildup at 5% for 5 years.
Year 1-$105,000---5%
Year 2-$110,250---5%
Year 3-$115, 762--5%
Year 4-$121,550---5%
Year 5-$127,627---5%
As you can see, your home would be worth approx. $127,627 in 5 years or about $27,000 equity buildup BUT you would lose all this in a foreclosure proceeding should you fall in arrears along the way. The bank is counting on you doing just that. Then they'll inherit that $125,000 home and you'll still owe them about $95,000 in the process PLUS all the interest you've already paid...ALL GONE!!! This is the primary reason why the loan was set up to pay the interest first!
A Mortgage Reduction Plan will assure your future appreciation, payoff more of the principle and thereby protect you from financial disaster. You must start now to accelerate the loan. No bookeeping is required with all bank managed plans and your money is protected from loss by the FIDC up to $250,000.
Each plan is personalized according to the parameters of your particular mortgage to show your exact savings. In addition, for your security and peace of mind we do not participate in the handling of your funds in any way and the account is always under your direct supervision and control through your banking institution.
*Get your guaranteed savings results prior to ordering plan by calling...
(904) 210-2990
* All savings results can be verified by a mortgage banker or Board Certified CPA.
WHY WAIT! Order your plan today!
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