Author: David Berky

Interest on the average home mortgage will cost the homeowner nearly TWO TIMES the cost of the home.

If you were to purchase a $150,000 home with a $120,000 mortgage (80%), and you paid an interest rate of 9% for 30 years, you will have paid over $227,500 just in interest (in addition to the original $120,000). That’s nearly two times the cost of the home!

A credit card debt of $7000 (now the average) at 18% being paid at the rate of $20 principal plus interest each month will take over 29 YEARS to pay off, almost as long as a home mortgage. Interest charged on this credit card debt will top $18,400, more than 2.6 TIMES the original debt!

If you work for a living, you know that when you are not working, you are not getting paid. But interest never gets sick, never takes a vacation and never sleeps. It is working against you 24 hours a day, seven days a week, each and every day of the year.

So what can you do?

You may not be able to pay off your debts or mortgage now. You may not have enough equity in your home for a loan. You may not be able to afford the refinancing costs or home equity loan costs. You may not be able to lower your credit card interest rates.

But you can make additional or extra payments.

So how does making an extra payment help lower your interest charges? Is it going to make next month’s bill smaller? You can’t scrape together too much for an extra payment so how is just $10 going to help when you owe tens of thousands?

The secret is in making early and consistent extra payments. For example, on the home mortgage shown above, if you pay an additional $100 each month you will save over $82,000 in interest payments. Not only that, but you will also have your home paid off nine years and two months earlier. You knock nearly 10 years off your mortgage just by paying an extra $100 a month.

How does that work?

Well, that $100 extra you pay the first month would have cost you about $270 in interest to borrow for 30 years. Since you have paid it already, you can reduce your last mortgage payment by $270. The next month’s extra payment will reduce your last mortgage payment by $268. Each month as you pay that extra $100, your final mortgage payment will be reduced until you won’t need to make a final payment, then the second to last payment, then third to last and so forth. Soon you will have shaved years and thousands of dollars in interest charges off your mortgage.

That’s great, but maybe you can’t spare $100 each month. How about $50, $25, or even $10? An additional payment of $50 each month will save you five years and seven months and about $52,000 dollars. $25 each month will cut your time by three years and three months saving you about $30,000. Just $10 a month will reduce your time by one year and three months and save you over $13,500.

Every little bit helps. Some months you may only be able to add $10 to your payment; some months you may be able to add $200. And this applies to interest on credit card payments or any other kind of debt repayment. Paying down as much of the principal (or amount you owe) each month will help reduce the interest you are charged and the length of time it takes to pay off the debt.

So why don’t the credit card companies charge you more of the principal each month?

How would you like to be making 18% on an investment? Wouldn’t you want this investment to last as long as possible? Of course! So do the credit card companies. They are happy for you to pay off your balance, but even more excited for you to keep paying them that 18% interest.

There are some other interest tips and tricks.

- One trick your mortgage company may have played on you is to include a prepayment penalty in your mortgage. If you try to pay off your mortgage early they may actually charge you for doing so. Or they may only apply part of your payment to the principal and take the rest as a “service charge.”

- Make sure when you make an additional payment that you send a check separate from your monthly mortgage payment with instructions that the amount is to be applied toward the principal of your loan. Otherwise they may just apply it towards next month’s payment and still charge you the interest.

- Generally you will not have this problem with credit card companies. But watch out for late payments or going over your credit limit. They may then use these “rule infractions” as cause to raise your rate to over 25%!

- If you are looking to refinance your mortgage, look for a mortgage that lets you pay on a bi-weekly basis. Since many people receive a bi-weekly paycheck this also makes it easier to budget your money. If you are paying every two weeks you will make an additional monthly payment each year (26 bi-weekly payments vs. 12 monthly payments). Also, because you are paying the principal down every two weeks rather than every month your interest charges will be reduced.

You CAN take control of your interest charges. Make those extra monthly payments. The feeling of being debt-free will far outweigh the temporary pleasure of that burger, movie or new DVD-player.

© Simple Joe, Inc.
David Berky is president of Simple Joe, Inc. a marketing company that sells simple software under the brand name of Simple Joe. One of Simple Joe’s best selling products is Simple Joe’s Money Tools – a collection of 14 personal finance and investment calculators.  This article may be freely distributed so long as the copyright, author’s information and an active link (where possible) are included.

By Mark Aucamp

The question of whether to over pay your mortgage or accept a low return on your money invested is an importance issue in today’s economic climate. As a money saving expert, I will explain how you can save thousands of pounds by over paying your mortgage and why it is more tax efficient than saving money in the bank or building society if you have a mortgage.

As the Bank of England drives down interest rates in an attempt to control deflation; savers are left earning a pittance from their savings whereas some mortgage borrowers are saving hundreds of pounds in reduced mortgage payments each month. Borrowers on Tracker rate and those on the Standard variable rate mortgages have seen their mortgage costs drop drastically in some instances and they now find themselves with extra money in their pockets. The Co-operative Bank Mortgages department recently revealed that they had seen a 50% increase in mortgage borrowers making overpayment into their mortgage accounts.

What the Co-operative Bank discovered

The Co-operative bank conducted a poll of 1000 adults from their bank to expose some of the reasons why borrowers were overpaying their mortgages. It revealed that 80% of those polled declared their reason for overpaying their mortgage was due to low returns on their savings accounts; some 37% choose to pay extra money off their mortgage due to the reductions in the base rate; whilst 24% of borrowers were choosing to disregard the recession and spend their surplus money on clothing and holidays. The Co-operative bank said it appeared that customers were recognising the benefits of making overpayment in light of the historical low interest rates being paid to savers at present.

Flexible Mortgages are the Future

Some mortgage lenders will not allow overpayments, while other lenders would allow a maximum of five or ten percent overpayment each year. Other lenders like the Co-operative bank and the Northern Rock will allow their borrowers to overpay larger amounts off their mortgage balances each year. In the case of the Northern Rock they will allow the borrower to overpay the whole amount to within £1 of paying off their mortgage without incurring any penalties for making large overpayments. These types of mortgage accounts are called ‘flexible mortgages’ as they allow the borrower to overpay, underpay and borrow back the overpayments already made. Flexible mortgages put the borrower in control of their mortgages.

It makes financial sense!

It makes real financial sense for mortgage borrowers to make even small monthly overpayments, as these overpayments can add up to a large difference over the lifetime of the mortgage. By making an overpayment you will reduce the amount of the mortgage outstanding and if you continue to over pay you will also reduce the term of the mortgage. By reducing the term of the mortgage you will save enormous amount of money in interest payments that you would have otherwise paid if you had not made any overpayments.

Better Interest rate than a Savings account

Many people are overpaying their mortgages due to the low returns received from their savings accounts and the higher costs of their mortgages. If you are committed to a mortgage with an interest rate of say 5% and your savings account is offering you 1%; then it is advisable to overpaying your mortgage debt that has the higher interest cost. The sooner you can pay off a higher interest rate debt the cheaper the debt becomes and the more money you will have saved.

Tax efficiency

By far the best reason for paying off your mortgage rather than saving the money in a savings account is that you will not pay any tax on the money you pay off on your mortgage. Where as the money you earn on your savings account is taxable at 20% at source by Inland Revenue and if you are a higher tax payer than it will cost you a further 20%. So for a higher rate tax payer the benefits of overpaying your mortgage are substantial more cost effective and it is just as cost effective for lower rate tax payers.

It’s not in your Banks Interest for you to overpay your mortgage

It’s not in a banks interest to see its borrowers overpaying their mortgages. Banks make money from the interest you pay them each month. So they do not want you to pay your mortgage off any quicker as they will lose money. This is possibly one of the main reasons that many mortgage lenders have limits on the amount of overpayments they will allow. Don’t ever believe your bank cares about you they only care about satisfying the needs of their shareholders. The longer the duration of your mortgage the more interest you will pay the bank; for example a twenty five year mortgage will earn the bank more money than a twenty year mortgage.

Contributing author Mark Aucamp has been providing Talk Money Blog with regular Money Saving Advice advice and comments. Mark has extensive experience in providing Debt Management, Quick Mortgage Advice and solutions. He is recognised as an authority in the field of debt management and mortgage advice. Find out how to clear your credit card debts legally!

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by Brenda Puckett

Every homeowner is familiar with the term mortgage, but many outside the mortgage and real estate industries don’t really know what the term means.

At its most basic, a mortgage is a type of loan which uses your home for collateral. Unlike most other loans, if you do not pay your mortgage, the lender will take your house.

Mortgages are available in many different varieties to suit your financing needs. The most common mortgage is a 30 year fixed rate mortgage, but adjustable interest rate mortgages are popular as well.

ARMs can be set up with many different sets of terms with a variety of different base interest rate sources.

There are also commercial loans if you are planning on buying an apartment complex or other type of real estate that has the potential to make you money.

Before you decide to buy a home, it’s very beneficial to do as much research as possible. You should try to learn about each different type of mortgage and what the payments actually consist of.

Do the payments change each month? Should you put a lot of money down before setting up payments. It can be very complicated and stressful for almost anyone due to the sheer number of potential mortgage arrangements.

Many people dream of owning a home. People who didn’t get educated prior to applying for a mortgage are suffering in today’s marketing. Take some time to learn about mortgages before shopping for one.

To get more informatiabout about the mortgage process, call Brenda Puckett at (http://georgialoanadvice.com) Home America Mortgage. Get more info about (http://georgialoanadvice.com/fha_loans_in_georgia.htm) FHA loans.

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By Owais Siddiqui

The state of North Carolina is located on the South East side of the United States of America. In the past few years, the economy of North Carolina has outgrown to a great extent because of the advancements in the fields of biotechnology, finance and engineering.

There are many consumers not specifically in North Carolina but all around the world that are frustrating of paying high interest on their mortgage loans or equity loans. Each month they waste thousands of dollars in paying off the interests charged on the loans that they have taken out. However, now they can get out of this situation with the help of refinance loans. Refinance rates in North Carolina are quite low nowadays and if you own equity in this state then you should definitely apply for these types of loans to avail the opportunity of getting low interest bearing loans.

There are countless benefits of these low interest rate loans. If you want to pay off your mortgage loan fast then you should get this awesome loan and pay off the mortgage loan with it. Afterwards, you will have to make lower payments each month and you will get rid of this loan faster than you could before. This way you will get the ownership of your home quickly. With the help of refinance loan, you will be able to save a lot of money each month. You can utilize this money elsewhere or you can just save it in your account and by the time you will get retired, you will have many savings.

One type of refinance loan is cash out refinance loan through which you can pay off your outstanding debts etc. Right now there are many people who have accumulated huge debts because of the inflation hence, cash out refinance loan will very beneficial for them. With the help of it they will be able to attain freedom from all of their liabilities.

You can easily find many lenders offering low interest rate loans in North Carolina over the internet. First gain as much knowledge as you can about refinance loans, consult different lenders, make comparisons between their deals and then choose the deal that is best for you. Refinance loan can make your future secure by saving thousands of dollars in the long run. You will finally achieve the peace of mind that everyone wants to have in their lives.

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