Save a Lot of Dollars on Fairfax VA Homes Mortgage

For those buying Fairfax VA homes for sale, this mortgage method will save you thousands of dollars on your mortgage, increase your net worth and equity faster , and pay off Fairfax VA homes in almost half the time . There are a handful of methods to do this, but there’s only one right method .

This little heard of mortgage requirement is one that most Fairfax VA home buyers don’t realise, and one most bankers don’t talk about. However, if you do it right, bankers will have to make it for you.

After obtaining a mortgage, your monthly payment is actually made up of four things :

  1. Principal – the amount you borrowed and will have to pay back.
  2. Interest – loan interest.
  3. Taxes – annual real estate taxes that goes into the monthly escrow account.
  4. Insurance – annual hazard insurance policy also that goes into the monthly escrow account.

The first two, Principal and Interest, make up the bulk of the monthly payment. Using a $200,000 mortgage at 6.5% amortized over 30 years for instance , the monthly payment will be $1,264.14 but may reach $1,500 if Taxes and Insurance are counted in. However, though the payment amount of $1,264.14 stays the same every month, the Principal and Interest part constantly varies every single month .

Almost all of the initial payments only pay off Interest. This is called a front-end loaded mortgage or standard amortisation schedule. Over 30 years or 360 months, $1,264.14 monthly means a total of $455,090, meaning you’d pay $255,090 in just interest alone .

Close to 85% of the initial monthly payments will be purely mortgage interest, and only 15% going toward reducing the principal of the amount you have borrowed. That’s $1,085 in interest, and only $180 counting towards 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 decrease goes up a dollar .

This process goes on 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? Learn more  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.

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