The Truth about Mortgages

Oh yes everyones dream! A nice house maybe a piece of land. A place to call your own. Everyone wants the same thing. Our tastes differ , but ultimately we all want to own our own home. Many accomplish this dream and then spend the next 20-30 years of their life paying off their mortgage. You hear people all the time say these words, " Oh I have a very good interest rate!" " I've got a 4% interest rate on my home!" What they fail to realize is they don't actually have a 4% interest rate! They have a 4% compounded interest rate. Einstein recognized that one of the greatest inventions of the 20th century was compounded interest! Credit card companies, loan offices and mortgage companies absolutely love compound interest! Many people don't really know what the word mortgage really means. In the word mortgage, the mort - is from the Latin it literally means DEATH! Gage in the sense its used in this case means a pledging to forfeit something of value if a debt is not repaid. So mortgage is literally a death pledge. Modern day mortgages really are a sort of death grip. The average home owner will end up many times paying two to three times the value of their home before all is said and done. For many years the payments are actually offsetting the huge amounts of interest required to borrow the principle. Many people also fail to realize that even with small measures they can ultimately save themselves thousands of dollars and pay off their home in a third of the time normally required. Most payment books or mortgage statements have a space where the borrower can direct a certain portion of the payment to go directly towards the principal. Lowering the principal in turn starts to lower the amount of interest that is owed. Getting in the habit of paying extra amounts even if they are small can make a huge difference. Stipulating to the lender that this extra amount go towards the principal is not only perfectly legal its extremely wise! You are building your own momentum towards lowering not only the time spent paying off your house but also the total amount owed!