How to Save Thousands on Your Fairfax VA Homes Mortgage Part One
For those buying Fairfax VA homes for sale, this mortgage strategy will save you tens of thousands of dollars on your mortgage, build your net worth and equity faster, and pay off Fairfax VA homes in half the time. There are a handful of ways to do this, but there’s only one right way. This little known mortgage requirement is one that most Fairfax VA home owners don’t understand, and one most bankers don’t advertise. However, if you do it right, bankers will have to execute it for you. After obtaining a mortgage, your monthly payment is actually made up of four items:
- Principal – the amount you borrowed and will have to pay back.
- Interest – loan interest.
- Taxes – annual real estate taxes paid into the monthly escrow account.
- Insurance – annual hazard insurance policy also paid into the monthly escrow account.
The first two, Principal and Interest, compose the majority of the monthly payment. Using a $200,000 mortgage at 6.5% amortized over 30 years as an example, the monthly payment will be $1,264.14 but may reach $1,500 if Taxes and Insurance are added. However, though the payment amount of $1,264.14 stays the same every month, the Principal and Interest portion changes every single month. Almost all of the initial payments count towards Interest. This is called a front-end loaded mortgage or standard amortization schedule. Over 30 years or 360 months, $1,264.14 every month means a total of $455,090, which means you’d pay $255,090 in just interest alone. About 85% of the initial monthly payments will be purely mortgage interest, with about 15% going toward reducing the principal of the amount you originally borrowed. That’s $1,085 in interest, and only $180 toward the principal. Seems very self-defeating, right? Next month won’t be any better, as the interest portion will go down by about a dollar, while the principal reduction goes up a dollar. This process continues throughout the mortgage, and with a standard 30 year mortgage, the original amount of $200,000 you borrowed won’t even be paid off half-way until the 22nd year. So how can you save thousands of dollars on Fairfax VA homes for sale? Find out on Part Two of this powerful “Insider” strategy!
Thierry is a Real Estate Agent at RE/MAX Premier, and Host of Talk Radio’s, “Inside Real Estate” Thierry & his team Guarantee a $25,000 minimum savings for Northern VA Homebuyers by applying his unique insider techniques & strategies that he discovered throughout 8 years of exclusive Radio Interviews & Insider Access to wealthy Real Estate Insiders, Investors & Top Industry experts. Phone: (703) 222-6714. Thierry@ThierryRoche.com Copyright 2010 Inside Real Estate, LLC. All Rights Reserved.