OCKHAM
Jedi
http://www.signs-of-the-times.org/articles/show/129356-34+percent+of+homeowners+are+clueless+about+their+mortgage
After reading the article posted on SOTT about American stupidity when it comes to mortgages, I decided to share some insight into the minds of those who don’t understand these things by revealing a technique I currently use.
It is called an interest only loan, and most assume it is to be used as a way to just pay interest on money borrowed over a period of time. Actually, that is what they would like to you to believe.
In order to best explain how an interest only loan can benefit you, we must have something to compare it to, such as a fixed loan. Let’s take a mortgage of $90,000 and apply this technique in comparison so you can see how mortgage companies are screwing you big time.
If you borrow $90,000 at 7% interest for 30 years fixed payments with a simple mortgage, you will pay approximately $215,000 over 30 years. This will cost you an additional $125,000 on top of what you bought.
If you borrow $90,000 at 7% interest for 10 years with an interest only loan, you can cheat the mortgage company out of about $85,000. Sounds good doesn’t it? How does it work?
Your original payments with the fixed loan are between 5 and 600 dollars a month. Your interest payment on the 10 year loan will be about the same. Instead of paying the interest only, pay double. Send an extra 4-500 dollars every month. Within 5 years, your interest payments will have dropped dramatically and you will be paying mostly principle.
If you cannot send this much extra, your $85,000 profit will dwindle rapidly. If you only sent in a couple of hundred dollars extra, you will still have the capability to swindle the mortgage company out of some of their money. You will however have a balance due at the end of 10 years to deal with also, which you really want to avoid.
How much interest is actually paid during the 10 years? This will depend on exactly how much you send it every month, but if you pay off the loan in 10 years, it will be less than the $60,000 you would have paid just for interest alone still owing the complete $90,000.
If you’re paying $500 a month in interest, that is $60,000 interest in 10 years. Your job is to reduce that amount while paying off the mortgage at the same time. This will reduce the $60,000 to around the $40,000 range, maybe less, and you will own your home in 10 years.
When you subtract the $40,000 from the $125,000 you would have paid for a conventional fixed 30 year deal, you profit $85,000.
This $85,000 is a figure that is hidden in the straw in the minds of Americans because they are told other things. Of course this figure is matched to this particular circumstance.
No matter how much misery you go through to earn your fair shake in the economic traps set for you, you should learn how to sacrifice in your favor. Otherwise, you may now see how easily they are reaping you of your life savings with ordinary mortgages.
When I first set up an interest only mortgage, I immediately started sending in large payments. Within a few weeks, the mortgage company knew what I was up to. They started calling me 3-5 times every day. Yes, it was quite annoying. They also sent several letters each month attempting to get me to switch to a fixed loan, they still do. They obviously knew I was setting them up for a big loss and wanted to attempt to thwart my advances to take advantage of them.
It is more painful it seems to go without money, but you are only fooling yourself. In reality, you are digging a giant $85,000 hole in your life savings in this instance.
If you can swing this kind of mortgage, you have a double back-up system built into it. The first one is of course, if you have money problems, you can just pay the interest that month. The second is, you can borrow money up to $85,000 cash and still use it if needed, and nothing changes from a normal mortgage manipulation.
Although, once you start separating loans out, you lose more on interest money, so only borrow smaller amounts of 10 or 20,000 if needed.
In a fixed loan, you can also overpay, depending on the mortgage set up, and have a balance paid off sooner, thus pocketing some of the interest you would have paid, but nothing compared to what you can do with an interest only loan, and in 1/3 the time.
If you search for this tid bit of info online, you will not find it. Everybody thinks about the negative application applied to the mortgage brain, that being focus on the name of the loan. You immediately focus on the fact you’re only going to be paying interest. That is what they want you to think. Don’t fall for it!
After reading the article posted on SOTT about American stupidity when it comes to mortgages, I decided to share some insight into the minds of those who don’t understand these things by revealing a technique I currently use.
It is called an interest only loan, and most assume it is to be used as a way to just pay interest on money borrowed over a period of time. Actually, that is what they would like to you to believe.
In order to best explain how an interest only loan can benefit you, we must have something to compare it to, such as a fixed loan. Let’s take a mortgage of $90,000 and apply this technique in comparison so you can see how mortgage companies are screwing you big time.
If you borrow $90,000 at 7% interest for 30 years fixed payments with a simple mortgage, you will pay approximately $215,000 over 30 years. This will cost you an additional $125,000 on top of what you bought.
If you borrow $90,000 at 7% interest for 10 years with an interest only loan, you can cheat the mortgage company out of about $85,000. Sounds good doesn’t it? How does it work?
Your original payments with the fixed loan are between 5 and 600 dollars a month. Your interest payment on the 10 year loan will be about the same. Instead of paying the interest only, pay double. Send an extra 4-500 dollars every month. Within 5 years, your interest payments will have dropped dramatically and you will be paying mostly principle.
If you cannot send this much extra, your $85,000 profit will dwindle rapidly. If you only sent in a couple of hundred dollars extra, you will still have the capability to swindle the mortgage company out of some of their money. You will however have a balance due at the end of 10 years to deal with also, which you really want to avoid.
How much interest is actually paid during the 10 years? This will depend on exactly how much you send it every month, but if you pay off the loan in 10 years, it will be less than the $60,000 you would have paid just for interest alone still owing the complete $90,000.
If you’re paying $500 a month in interest, that is $60,000 interest in 10 years. Your job is to reduce that amount while paying off the mortgage at the same time. This will reduce the $60,000 to around the $40,000 range, maybe less, and you will own your home in 10 years.
When you subtract the $40,000 from the $125,000 you would have paid for a conventional fixed 30 year deal, you profit $85,000.
This $85,000 is a figure that is hidden in the straw in the minds of Americans because they are told other things. Of course this figure is matched to this particular circumstance.
No matter how much misery you go through to earn your fair shake in the economic traps set for you, you should learn how to sacrifice in your favor. Otherwise, you may now see how easily they are reaping you of your life savings with ordinary mortgages.
When I first set up an interest only mortgage, I immediately started sending in large payments. Within a few weeks, the mortgage company knew what I was up to. They started calling me 3-5 times every day. Yes, it was quite annoying. They also sent several letters each month attempting to get me to switch to a fixed loan, they still do. They obviously knew I was setting them up for a big loss and wanted to attempt to thwart my advances to take advantage of them.
It is more painful it seems to go without money, but you are only fooling yourself. In reality, you are digging a giant $85,000 hole in your life savings in this instance.
If you can swing this kind of mortgage, you have a double back-up system built into it. The first one is of course, if you have money problems, you can just pay the interest that month. The second is, you can borrow money up to $85,000 cash and still use it if needed, and nothing changes from a normal mortgage manipulation.
Although, once you start separating loans out, you lose more on interest money, so only borrow smaller amounts of 10 or 20,000 if needed.
In a fixed loan, you can also overpay, depending on the mortgage set up, and have a balance paid off sooner, thus pocketing some of the interest you would have paid, but nothing compared to what you can do with an interest only loan, and in 1/3 the time.
If you search for this tid bit of info online, you will not find it. Everybody thinks about the negative application applied to the mortgage brain, that being focus on the name of the loan. You immediately focus on the fact you’re only going to be paying interest. That is what they want you to think. Don’t fall for it!
