Some information about mortgages. Home buyers should consider this if they want to buy a home but think that they will need to sell it in the next two years. Buying and selling property costs money and it takes time to build equity through appreciation and loan payments. Currently there are many homes on the market that have been owned for less than two years.
A 30 year mortgage, for 250,000 at 6.31% interest
Year 1, first payment
Payment Principal Interest Loan Balance
$1,549.06 $234.48 $1,314.58 $249,765.52
Year 5 , Last Payment
$1,549.06 $319.51 $1,229.55 $233,509.52
Total payments after five years: 92943.36
Equity in home after five years: 16490.48
In five years there will also be appreciation, making the equity in the home higher.
When refinancing take into consideration that the early mortgage payments are mostly interest payments and don’t build much equity.
For some loan calculators visit: http://www.alexstenback.com/calculators/ also see the calculators on www.Realtor.com
Lenders are welcome to comment on this and to send me information that I can link to. I would like to write a consumer oriented post about mortgages.
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[...] Also see Home Equity [...]