How is interest calculated on mortgages?

I have a mortgage on 拢76000 at a rate of 7.44%





So in my calculations thats 拢82,000





but the mortgage people say ill end up repaying 拢210,000 at 拢450 a month over 40 years.





Can someone explain this to me please?





Many Thanks :DHow is interest calculated on mortgages?
The interest rate quoted is the interest you pay PER YEAR. As you mention, you are taking the loan for 40 years.





Each year you pay a little more on principle then the previous year, thus a little less interest each year. Over the course of 40 years of doing this, the loan balance gets to zero. This is called loan amortization.





So, in the first year you will pay interest of 7.44% on 76,000. That is interest of 5,654 in the first year.





Normally, in the first year, your actual payments would total about $6,000 (500 per month). This means the extra $339 reduces your principal by that much.





So in the second year you will pay interest of 7.44% on $75,631. That is interest of 5,629. Which means you pay 371 of principle





This goes on down the line for 40 years. Each subsequent payment has a higher amount going to principle, until the last payment, when the loan is totally paid off.





However, the numbers you provide from the mortgage people do not quite tie together. It is close, but not 100%. You cannot fully amortize your loan of 76,000 at the stated interest rate over exactly 40 years by paying $450 per month. The payment would be almost $500 per month to do this.How is interest calculated on mortgages?
There is some information missing in this problem. You need to ask the mortgage people how often that rate is compounded per year. If you can give me that information, then I can help you. I took a course in financial mathematics, so I know all the math like the back of my hand.





To add details:


1. On the page for your question, click on the ';Edit'; button, which has a pencil next to it.


2. On the drop-down menu, click on ';add details';.





Also, your mortgage people are terrible at math:





If you pay 450 a month, then that's a total of 450 * 40 * 12 = 216,000 in 40 years. If you are not comfortable with this incompetence, then you should use a different company.
interest is a difficult thing to explain. I think your math was done yearly correct? Don't forget to compound it...





With a mortgage you pay interest every month on the entire unpaid balance.





Yes you pay interest every month.. on a 76,000 @ %7.44 you would pay about 472 interest the FIRST MONTH





This website explains it the best





http://michaelbluejay.com/house/interest.html

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Who is offering the best mortgages right now?

Need to take out a 387,000 dollar mortgage. Putting 5% down. What fees are negotiable? Which fees arent? What is my best move?Who is offering the best mortgages right now?
I would suggest looking at


http://www.bankrate.com/





Your situation will be unique. Since you aren't at the 80% Loan to value mark, you may want to look at Lender MI. That way you don't have to pay PMI, which on a house that size it will take a while to get to 80% LTV. So I woul go with lender MI because you will only have to pay probably .5% more in interest rate and not have PMI. That means right now you probably could get a mortgage at 6.25%. which is pretty good. considering your loan to value.





Or you could go with a two loans an 80% loan and 2nd mortgage loan, but generally the 2nd is much higher rates. So you need to look at the whole picture.





My first house I bought with lender MI, I had 6.625% which was O.K. but now that I have been there for 2 years I now refinanced the whole thing to a 15yr fixed rate @ 4.625%


So I got that working for me, which is nice.





As far as the Fees are concerned they are pretty standard in the retail business, if you go wholesale different brokers charge different broker fees.





Retail generally has lower fees but higher rates


Wholesale generally has higher fees but lower rates





based of the size of your mortgage you may want to get a broker working on it for you. Just be wary of their fees. Brokers get more on bigger loan sales. Add to your question if you need better clarification.


Oh and keep tabs on the bond market 10yr Treasury notes in particular they drive when it is best to lock in a rate.


That is why I got 4.625% because I timed it perfectly. That is without buying the rate down too. And I just closed on the 8th of February so things have changed drastically.Who is offering the best mortgages right now?
Your best move is to not go with people who are in here spamming for business and who will email you solicitations.





What is negotiable depends on the lender and the title company, but those fees are negotiable. Ask questions and negotiate the fees down.





I always recommend that you look at the total package, make sure you are comparing apples to apples.

What Happens To The Mortgages On All The Homes Destroyed In The Midwest?

I'm sure people had to have homeowner's insurance, but most had no flood insurance...sooo...If the people have lost everything and the insurance isn't going to cover their losses...then what happens to the mortgage loan that they owed? Will they go into foreclosure? Then the bank will own the land and the debris?If they do, will the banks be the next institution to fail?What Happens To The Mortgages On All The Homes Destroyed In The Midwest?
The banks are left holding the bag

Help me find a good web article on early payoff of mortgages?

All articles I can find on the web advise people AGAINST early payoff of their mortgages, saying ';there are better uses for your money';.





Can you help me find an article that advocates FOR early payoff? Please post the link.





ThanksHelp me find a good web article on early payoff of mortgages?
I don't know of any articles, but the AGAINST group usually point out the tax break that you will loose from paying it off.





HOWEVER, I usually go by the rule of thumb that unless you can find a savings account that pays a higher rate then what you have to shell out for your mortgage. Then pay the sucker off.





Make sure you don't have a pre-payment penalty on your mortgage though.Help me find a good web article on early payoff of mortgages?
There is a lot of misinformation about the benefits of not paying off a mortgage and very few sites that advocate paying it off.





As an example, Dave Ramsey has advised people not to pay off a mortgage (even for people in their 60s) since he states that you can make over 12% in the market with your money. His facts are totally incorrect. Even if you purchased the DOW at the low of 1932 and sold it at the high of 2007, the return would have averaged 8% APY but if you purchased at the high of 1929 and sold at the low of 2009, the return would have averaged only 4.5% APY.





Then there are periods of time that the market has performed very badly. As an example, during a 12 year period during the 1970s-1980s, the market did not increase in value but CDs were paying double digit interest rates. If you had invested in the market during that time, you would have lost 50%-65% of your investment due to inflation. Then of course there is the last 9 years where the market is currently about 30% lower than it was 9 years ago causing losses of well over 50% in real terms (inflation adjusted).





The assumption is that if you hold stocks long enough, the market will perform better than your mortgage. Unfortunately we do not have an unlimited life expectancy and may not be able to support ourselves (to make those big mortgage payments so we could have money to invest in the market) without withdrawing our investments during the hard times when the investments are significantly down making our returns from the market near zero or even losses.





If security and comfort is important to you, pay off your mortgage. No one can predict the future.





The advice that you are getting is similar to the advice that banks accepted over the past several years. Their risk management indicated that they could loan money to anyone and they would always make a profit. Now the banks are in debt $2.7 trillion (according to IMF estimates) and it will take them about 20 years (if they can return to maximum profitability) to pay off that debt. Many will likely become insolvent in the future when interest rates rise once again.

In Alberta, where does one get access to public records about mortgages?

To find out the name of the company holding the mortgage on a certain property, would this information be obtained from Alberta Registries or the municipal council office?In Alberta, where does one get access to public records about mortgages?
You can get a Tax Roll from a municipal office, I think. My real estate agent got me one for a condo we were interested in buying.

Should we get money from the US bailout to pay our mortgages off?

I know the USA runs off of credit.*but* If we where to take part of the bail-out money available and pay off low-end mortgages and middle-class mortgages in the USA(within a certain range and cap, basically non-luxury), we would have all that monthly money to boost the economy by buying things and still have a house and get rid of foreclosures that exist right now. The USA would be a better, safer place to live right now. That would be change...How about that Obama?Should we get money from the US bailout to pay our mortgages off?
That would be so random and unfair to those just over the cut off and especially unfair to those who rent!





Would those poor and middle class people who have 200k in a mortgage for an expensive house get given 200k and then be able to sell the house and get that 200k back while someone who bought a house they could afford at only 70k only get only the 70k?Should we get money from the US bailout to pay our mortgages off?
Are not the bailout funds loaned to recipients? Paying off mortgages with borrowed funds may not give the boost you expect.
Absolutely, and how about two new cars for the garage

Are you tired of people just walking away from their mortgages?

I keep hearing people talking about buying a new home at a much lower price and then short selling their existing home because they owe too much on it. This is a big part of the problem and the home prices will not stabilize until people stop just ';walking away';.Are you tired of people just walking away from their mortgages?
Yes, what gives them the right just because they spent to much!Are you tired of people just walking away from their mortgages?
Actually, that is just a symptom of a much bigger and more complicated problem.





That problem is lenders who think that everyone should own a home and that put people into unrealistic mortgage situations. That, combine with consumer who do not take the time to investigate and educate themselves on exactly what they are getting in a mortgage product are the real problems.





The lending community for the last 10 years has been increasingly focused on making money hand over fist at expense of the consumer. They consistantly lowered the bar for qualifying for mortgages and encouraged consumers to max up their mortgage debt to unrealistic amounts. The lending community set themselves up for the current foreclosure and short fall rate with their short-sighted lending practices.


Additionally, consumers, who in every other area of their life investigate the product until they find the very best, will just blindly agree to whatever the lender tells them without out considering their actual budget or what may happen in the future.





Home prices will not stablize until consumers start educating themselves and lenders start demanding higher standards for borrowers. They need to face the reality that some people just should not own a home because they cannot handle the financial responsibility that goes along with it.
People can walk away from their mortgage/home, but it will also ruin their credit. The mortgage company OWNS your home until you pay it off..when you can't pay for it and the mortgage companies won't help you refi, then there is nothing else they can do, since no one is buying either. President Bush wanted everyone to own a home..I mean everyone, so the mortgage companies were asked to help everyone and the low interest and no down payment is what they came up with. Everyone knew what they were getting into and everyone wants a home. Unfortunately the interest rates went up and it hurt so many people. Everyone can't afford a home and this was a way to get their dream home. Middle class people decided to do the same and buy Way too expensive of homes and really got stuck...too bad. It will get better, but will take more time.
You can't just walk away from a mortgage.
It will catch up with them eventually.

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