Mortgage home loan answers
Learn about mortgage home loans and rates.
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Understanding Compound Interest (home loan)?
Posted on February 17th, 2010 3 comments
Sara asked:
I am in the process of buying my 1st home. What I dont understand is that the mortgage company is charging more interest than the borrowing amount but the interest rate is what I see advertised everywhere in my area?? When I calculate the interest on the loan it is completely different from what they are telling me. Is it normal to pay more interest on a home loan?? Or what is normal?
Right now if I go with this loan it is like I am paying for two houses or an amount that I would have never considered on a home before because it would seem out of my range. I dont get all this so any help is very much appreciated. I would love to think I am making a good choice if it is…..I really like this home.
ARRONRenting & Real Estate Calculate Interest, Calculate Loan, Compound Interest, Home Loan, Interest On The Loan, Interest Rate, Mortgage Company3 responses to “Understanding Compound Interest (home loan)?”
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Without specifics to illustrate what you are saying, it is difficult to answer your question.
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Your concern is a common one for first time buyers. Don’t panic. It’s something every homeowner has to deal with.
While it is always a bit daunting to see how much interest you will pay out over the life of the loan, that’s the way mortgages are underwritten to make them affordable to home buyers while profitable to lenders. Also, keep in mind there are tax benefits from the mortgage interest you’ll be paying during the time you own the home.
Don’t let it stop you from buying the home you want. It’s a great time to buy! Just make sure you’ve got an experienced realtor looking out for your welfare. Good luck.
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When applying for a home loan your credit report will be reviewed and you may be required to provide a number of other details, including: Employment and income records, Tax Returns for the last few years List of assets, List of liabilities and what you owe, Your budget showing monthly living expenses so that you can demonstrate an ability to pay.
With this information you and your lender will be able to determine the kind of home loan and size of the right mortgage for you. In some cases, you can obtain a pre-approval or pre-qualified certificate, which shows how much you can borrow so that you can then shop for homes in an appropriate price range.
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AJ February 18th, 2010 at 18:18