Mortgage

Question: Mortgage cost ? how much will it cost me in addition to the price of a house?

(Posted by: Jabien on 2009-02-17 06:52:42)

If I want to buy a house that is 400000 on a 30 years mortgage of 5 %, a calculator would tell me that I would pay around $2000 a month for 30 years...that means a total of $720000. I don't understand because that would mean I would pay an extra 320K in addition to the initial price ? I though it would have been a basic 400K x 5 % so 20K ! Could someone explain me exactly how it works ? Thanks So for you how much would be my total cost (approximately) ? thanks ranger ! Wow I can't believe it. I mean, I think that we could afford to buy something with my wife of something like i said around 400K but I can't believe that if I want to buy now on a 30 year loan I would actually pay it 720k!!!!! I hate banks :o) :o(

Posted by: djinnsterr on 2009-02-17, 06:57:18

The interest isn't just compounded on the intitial $400,000 purchase, it is compounded on the monthly balance left on your mortgage.

Posted by: ranger_diy on 2009-02-17, 07:39:12

Here is a real world example. I have a 30 year fixed mortgage of around $90,000 at 6.125%. I paid around $6000 last year in interest. Only a little over $1000 went towards principle. As you can see, loans are expensive.

Posted by: sensible_man on 2009-02-17, 09:10:03

You are paying, big time, for the privilege of borrowing money. Many people pay 3 times the original price over a 30 year mortgage. Normally, you will need to have 20% of the house price as a down payment. This would be $80,000 for the down payment. You will be paying interest at the rate of 5% on the "unpaid balance ".