Paying too much in monthly mortgage interest
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If you currently have a mortgage or a just about to sign on one, you know how expensive they are, yet how important they are. For most people, a mortgage is the only means of owning a home.
Mortgage analyst, Craig Romero, recently released an article on mortage-listings.com, titled, “97% of American Homeowners Overpay Their Lender in Mortgage Interest Every Month.” In this article, Romero releases the shocking information that mortgage borrowers will cringe to hear; they are grossly overpaying on monthly interest rates.
According to a National poll, 97 percent of Americans overpay in monthly interest. But what the poll was trying to find out is how many people were not overpaying; three percent.
“The National poll was conducted last month to determine how many homeowners take advantage of the prepayment loophole in our mortgage system, which eliminates costly interest overpayments.”
Sean Drover, a businessman from Chicago, recently discovered that he was overpaying $217 monthly in mortgage interest.
“Honestly, I was sick to my stomach when I thought back on all the monthly payments I’d made. If I would have known about the pre-payment loophole when I first bought my home I could have put all that money into equity instead of my lenders pocket,” Drover said.
The reason the majority of Americans are overpaying on their mortgage interest is because of a term called “front loading.”
Front loading is, “when the majority of a homeowner’s payment is applied towards the interest on the loan instead of the original amount borrowed.”
As a result, front loading is the primary reason that borrowers will pay at least threes times over the original amount borrowed on the loan. This extra money goes directly to your lender.
“Most people (97%) never stop and take a good look at how damaging the system really is. Unfortunately, it’s just the way conventional mortgages are structured here in America.”
According to Romero, the average American homeowner is overpaying in mortgage interest by $2,000 every year, or approximately $60,000 over the entire term of the loan.
“That’s an enormous amount of money,” said Romero. “This is money that homeowners are needlessly giving away each year. Imagine what a person could do with an extra $60,000.”
This prepayment loophole that is available will not only save you thousands of dollars on mortgage interest, it can also cut the traditional mortgage term by 10 years.
“Americans must understand this prepayment loophole isn’t something lenders are eager to share with their customers. If they did, they would risk taking a huge cut in profits.”
Prospective mortgage borrowers should research information about this prepayment loophole. Your lender will probably say it is a farce, or something along those lines.
But wouldn’t you rather try something that may be a farce, rather than pay an extra $60,000 out of your pocket.
