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Essay in mortgages
Essay in mortgages
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Mortgage Amortization, by definition, is “referring to the process of paying off a debt over time through regular payments. A portion of each payment is for interest while the remaining amount is applied towards the principal balance”(Google). By making the repayments in either monthly payments or the sum of the total payments, people will decrease the amount that they owe, which will help people to save their money in the long run like what the author Glen Craig states “As the interest portion of your payment declines, the principal portion increases, and with it, the remaining term of the loan gets shorter,” as soon as people start paying the principal, the payment period will get shorter.
A mortgage is a big debt, and it is almost as big as a person’s home. Everyone wishes to shorten the term by prepaying as much of the loan as they can and as quickly as possible. Since the cumulative interest on mortgage loans makes people’s loan balance even bigger. Owning a house without any loan will helps house owner to save money more easily because house owner will not have to pay the monthly payments anymore.
The short-term mortgage loan and long-term mortgage loan will, eventually, make a huge difference to the house owner. The faster the balances that house owner gets to pay off, the more money they can save. For example, as the author Glen Craig has mentioned in this article, “paying off your loan in 20 years instead of 30 will save nearly $120,000 in payments (based on a $200,000 loan), freeing up money for investing or for what ever else you want to do,” $120,000 is a lot of money, and house owner could investing in some other projects. For example, buy another house in Pittsburgh or some other area with that 120,000 dollars and r...
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...For people who have 30 years mortgage, their amortization will remain stuck in slow motion. So it is better to pay off the mortgage as soon as possible.
Amortization basically means that your loan was set up in a way that will take a specific amount of time to repay it. As time passes, some of the payments will go to the interest, and some will go to the principal. Usually with the mortgage amortization, people pay more for the interest other than principal in the beginning of the year. Therefore, the faster people can start to pay off the principal, the faster the debt owner can pay off the balance.
Works Cited
CRAIG, GLEN. "What Is Mortgage Amortization and How Does It Work?"Free From Broke. N.p., n.d. Web. 25 May 2014.
"What Is Mortgage Loan Amortization - Google Search." What Is Mortgage Loan Amortization - Google Search. N.p., n.d. Web. 25 May 2014.
Psychguide (2016). Obsessive Compulsive Disorder Symptoms, Causes and Effects. Retrieved August 20, 2016, from http://psychguides.com
There was a new concept of credit nicknamed "buy now, pay later." Not long after this concept came to be, the stock market crashed. For the decades before the current housing crisis, buying homes and loaning money was a simple, but strict, affair and had two outcomes. Either the borrower could pay back the money owed, or they could not pay the money back. If the borrower could pay the money back, they could keep their house or whatever they took out the loan for.
Mortgage Costs Most people that decide to buy houses do so by applying for loans. There are two distinct types of mortgages and loans. The first type implies fixed rates. The advantage of this type of mortgage lies in the fact that you know ahead of time what you’ll be paying monthly. The disadvantage is that while your debt decreases over time, the monthly rate you have to pay remains the same.
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Nothing can make you feel safer than owning a house, provided that buying a home will not result in financial problems of its own. Every year, a new wave of first time home buyers hits the trail in search of their humble abode. There are pros and cons to home buying. Certainly, there is the matter of timing and related financing programs.
Buying a home can be an exciting experience for anyone. However, in some cases you just might be better off continuing to rent your home. There are many advantages to buying a home. However, it is not for everyone and buying varies from individual to individual. Currently more people are leaning towards renting but this could change in the near future.
As soon as the fixed-rate period expires, the future interest rates will be unpredictable. The ARM provides great protection against future rate explosion and those whom credit has declined during the 7-year period. Graduated Payment Mortgage (GPM) begins with a low rate and increases over a period of time, it enables a buyer to be qualified for a loan who ordinarily not meet the requirement for a regular fixed-rate mortgage. Nevertheless, GPM comes with risk to meet the increase in payments in case severe deflation. The core contrast with GPM and ARM is that the borrower agrees that the payment will change.
When subprime mortgages began to flourish, the term housing bubble came into existence. The term relates to the time in which houses sharply increased in value, and consumers often borrowed at less than the lowest rates. People believed that the price of their homes would rise and they could then refinance for lower payments. The problem with that mentality is many people didn’t just refinance for lower payments, they also refinanced for personal spending. Inflation of home prices meant homeowners suddenly had more equity and were able to spend the money as they chose.
At the end of the day every penny spent will be worth it because it will be going towards the ownership of the home with every payment. Some of the advantages that come with becoming a homeowner include equity, and building ones credit. According to the article Renting vs. Buying a House – How to Make a Decision, Pros & Cons by Michele Lerner she says that, “Even if your home doesn’t increase in value, though, you’ll be building equity as you pay down your mortgage as long as your home maintains its value”(1). Just in case the value of the house does not increases the homeowner will be building equity by paying the mortgage. Some see homeownership as a sign of accomplishment, and success. It is a sign that one has gained a better quality of life. Being a home owner frees one from the obligation of renting places and having one to constantly move or have the landlord tell one to move. According to an article in Zillow Owning Vs. Renting a Home says, “You can deduct mortgage interest as well as your property taxes.” Which on other words one can get tax deductions on the property one owns. According to the article Renting vs. Buying a House – How to Make a Decision, Pros & Cons by Michele Lerner
Buying a home is more complex then most think. A purchaser of a home doesn't pay in cash when buying a house. If that were so, then nobody would be able to afford one. A potential buyer must get a loan. The bank doesn't lend their money to just anybody, so there are prerequisites before a buyer should consider buying a home. The potential buyer must have enough money for a down payment which is 3% to 20% of purchase price, a steady job with for at least two years or more, must have a decent credit score with at least a 640 or better. That is standard for the market. (1) The credit score is based on the FICO score. FICO stands for, Fair Isaac Corporation, a company that has been in business since the early 1950's and monitors consumers' credit ratings and put a scoring system on it. (2) Conventional loans are usually financed up to eighty to ninety percent with a down payment required of ten to twenty percent. The potential buyer must also have a debt ratio not exceeding 28/39 of their income. The first number 28 refers to your new mortgage payment that cannot exceed 28% for your gross combined income and 39 refers to your mortgage payment plus revolving and installment debt as well as taxes and insurance cannot exceed 39% of you total combined gross income (3).
Buying and owning your home is part of the American dream. Although the dream itself has since changed, the home still remains the main focal point. Today owning a home doesn’t necessarily mean a house. People now buy duplexes, cooperative apartments, and condominiums. For some families it could take up to a couple of generations before it’s able to have the capabilities of buying a home. To many people it means a certain achievement that only comes after years of hard work. It is a life altering decision and one of the most important someone can make in their lifetime. The reasons behind the actual purchase could vary. Before anything is done, people must understand that it’s an extraneous process and it is a long term project.
Used Car Loans: 3 Pros and Cons. (2012, January 27). Retrieved May 3, 2014, from Cars Direct: http://www.carsdirect.com/auto-loans/used-car-auto-loans-3-pros-and-cons
"Adenosine - What Is Adenosine?" Adenosine - What Is Adenosine? N.p., n.d. Web. 09 Mar. 2014.
In the past year home values, along with home sales, have declined. At the same time many homeowners who had adjustable rate mortgages saw their monthly mortgage payments dramatically increase. This has created financial hardships for homeowners who are both unable to pay their increased mortgage payments
Whole Grains Council. (2003-2013). What is a whole grain? Retrieved 23 March, 2014, from http://wholegrainscouncil.org/whole-grains-101/what-is-a-whole-grain