Mortgage question-why so high?
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Why is a $200,000 mortgate over $1100 a month? Every way I add 5-7% monthly, annually, whatever, I get a payment that is much lower. At $1100, with no interest, I'd be paying the bank $396,000 after 30 years. Double the loan amount! Can someone explain how a mortgage payment is calculated?
I've rented forever, have a decent job, & 2 kids, I'd like to own a home someday. My credit is excellent, & I've been prequalified--but the payments are too high.
Mortgage question-why so high?My mortgage payment includes interest, finance charges, property taxes, and homeowners insurance. If your property taxes and homeowners insurance are not included in your monthly payment, you must make these payments on your own.
Mortgage question-why so high?It is figured through a decaying amortorization.
On a 200,000 mortgage paying 6% over 30years you will be paying almost an equal amount in interest over the course of the loan. However a large portion of that is front loaded.
Take this into consideration, 6% loan means you roughly will be pay .5% in interest per month.
so .005 X 200000 = $1000. That is how much interest you need to pay just to keep the $200000 from growing over time.
Granted this doesn't take into effect the compounding of interest over the course of the month, so it probably is slightly more than $1000, but you get the idea.
So the bank has a formula that then figures out how fast to decay your loan amount. $1050 to keep level and $250 in principle. So next month after paying $1300 on your mortgage you now owe $199750 on your mortgage instead of $200000. So instead of paying $1050 in interest next month you'll pay $1047 in interest and $253 in principle. This will go on untill you are paying virtually all principle at the last payment. However you have to pay a substantial amount of interest through out the loan. Granted it seems like a large number, but in reality you are borrowing almost a quarter million dollars. So it isn't that much, it is 6%.
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