Lose Your Mortgage, Own Your Home - A Mortgage Primer

Although the U.S. Truth in Lending Law requires that a lender disclose to a borrower the truth about their loan - what their interest rate will be, how much they will pay in interest on the loan over how many years, and the total amount they will repay on that loan, many people, even on signing, still do not really understand a number of things about their loan. Such as, why is that the amount they are required to repay, how is this all figured out and, can they, within the terms of their loan and their knowledge of loan workings, repay this loan faster and less expensively.n nThe fixed rate compounded interest loan, amortized over 30 or 40 years makes for a very expensive loan, although it would be safe to say that some of the newer loans are vastly more expensive in the long run. Worse, the theory behind how this banking or lending system works is a body of data which often seems complex to the average home buyer by virtue of the fact that no one has taken the time to explain it to them. It’s not even that it would be difficult to explain; it’s just that few professional individuals take the time to do so.nnAlthough interest rates over time can vary quite a bit, the principles of how loans work, how to pay them off faster and less expensively and how to control the payoff of your own loan are the same. Once you get the theory and see examples of it in practical application, that same data can be applied to any loan amount, any interest rate, any term, and any situation.nnOn average, a home buyer will spend approximately three to four times the amount they borrow to repay a home loan under the current system of banking. For example, on a loan of $100,000 at 10% over 30 years, a home buyer will actually repay $315,928.80. On a loan of, say, $300,000 at 10%, a 30 year loan will cost the home buyer very close to $1,000,000 for that home.nnThis is an expensive way to buy a home, and, in fact, this amount of expense in home buying is a relatively new idea. “New and improved” loan ideas which actually put the reality of HOME OWNERSHIP into a far away category are unnecessary, and, in fact, oppressive to the home buyer. That is my opinion, and a banker may have a very different opinion of it, but I, for one, am more in the ‘home buyer’ category than the lender category.nnThe real subject to understand, then becomes not so much “home buying” as “home ownership.” But, in this day and age, and under the present popular forms of mortgage loans, one has to know something about home buying in order to achieve home ownership.nnAlthough millions of people buy homes every year, few know enough about the subject to make that home purchase a viable activity. The good news is, the basics of this subject are very simple to learn and understand, and some of those basic facts are what any good mortgage book is all about. I am personally an advocate of people being able to own their own homes, lock, stock and barrel, and not having to stretch that home buying procedure over 20, 30 or 40 years. And I know that the easiest and best way to do that is to educate people on some of the various, simple ways they can bring this about. I don’t believe that people should be left in the dark, but that they should be brought to understanding so that they can determine their own future. That is my goal, and if anything I teach you brings you closer to it, then I will have achieved my purpose. nnI have found that the thing folks most want in life is to achieve an understanding of whatever it is they are dealing with because with that understanding they can do so many things, not to mention that it just plain feels good to understand things.