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Why does so much of your mortgage payment go to interest instead of it all just going to the principal and is there anyway around this aside from just paying more to the principal each month?
Wiki User
∙ 13y ago
The reason? That's how the banks make money on mortgages. The only way to pay it sooner is to add something extra every month toward the principal.
The reason? That's how the banks make money on mortgages. The only way to pay it sooner is to add something extra every month toward the principal.
The reason? That's how the banks make money on mortgages. The only way to pay it sooner is to add something extra every month toward the principal.
The reason? That's how the banks make money on mortgages. The only way to pay it sooner is to add something extra every month toward the principal.
Wiki User
∙ 13y ago
Wiki User
∙ 13y agoThe reason? That's how the banks make money on mortgages. The only way to pay it sooner is to add something extra every month toward the principal.
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Potentential effect of an increase in mortgage interest rate?
Increase in principal + interest payment.
What are the elements of a monthly mortgage payment?
Principal, interest, tax, and insurance
What is the average mortgage for a house that cost 250000?
Based on my experience in Illinois, your 30 year fixed mortage principal, interest, taxes & insurance monthly payment will be approximate 1% of your mortgage principal. So, if your mortgage principal is $250,000 less down payment plus interest plus taxes plus interest, your monthly payment will be about $2,500.
What are the disadvantages of a variable interest rate mortgage?
A variable interest rate mortgage is one where the amount of interest being charged may change during the course of the mortgage depending on the current interest rates, but the usually monthly payment remain the same. The disadvantages of this type of mortgage is that if interest rates go up more of the monthly payment goes towards paying the interest instead of the principal, taking longer to pay off the mortgage. If rates go to high, the monthly mortgage payment may go up, this is rare however.
What is mortgage principal curtailment?
A mortgage principal curtailment is an additional payment to principal.
The mortgage is interest only. how is the effect to mortgage?
It is considered a term mortgage which is how mortgages were before the amortized mortgage. In a amortized mortgage a part of every payment goes to principal (the amount you owe) and a part goes toward interest (what the bank charges to loan you the money) In the beginning almost all of the payment goes toward interest but as time goes by more goes toward the principal and less toward the interest until the principal is paid off. The interest only mortgage only pays the interest so you never pay off your debt.
What four elements are included in the total amount of a mortgage payment?
the principal the rate the time the interest
Can you just make one extra mortgage payment a year?
Yes, but it would be better if you can divided the extra payment into each mortgage payment through the year instead of waiting until the end of the year to make one extra payment because you will be lowering the principal as the year progresses which lowers the interest accrued.
Why do interest payments decrease each month and the principal payment increases?
Mortgages are typically "front-loaded." That means the interest is paid more aggressively in the beginning of the life of the loan than the principal. As the loan matures, less of your payment is devoted to paying the interest on the loan and more is applied to your principal balance. It is important to mark extra payments as being toward the principal, otherwise your mortgage servicer may apply any extra payments as an additional monthly payment instead of reducing the principal.
What is the average mortgage payment on 130000?
I don't think there is a such a thing as an average mortgage payment on any given dollar amount. The principal and interest payment depends on several factors besides the loan amount, primarily the interest rate and loan term(length of the loan). To keep it simple, a 130,000 mortgage at 4.5% for 30 years would be $658.69 for your principal and interest payment. If you could afford to do a 15 year loan, at the same interest rate, the monthly payment would be $994.49 and you would save nearly $60,000 in interest. If you change the interest rate, the payment could change significantly also.
How can i Lower my Mortgage Payment?
One option to shorten your mortgage payment, is to pay larger sums. This will allow you to take some money off of your principal, essentially lowering your overall interest.
What percentage of a mortgage payment is the principal?
Most mortgages are fully amortizing. Meaning the pay the principal down to 0 over the term. Many today have special payment schedules that allow lower payments originally, even less than the interest due so the principal even grows while your making payments.On just about any mortgage, the amount of the payment that is principal vs interest changes literally with every payment. You need to refer to an amortization schedule for your specific rate and terms.Standardly at first virtually the entire payment is interest. The last few years virtually the entire payment is principal.
