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Why should your monthly principle amount be such a small % of the payment! Who thinks this lending practice needs major overhauling infavor of the consumer?

2007-11-03 06:40:08 · 6 answers · asked by bulabate 6 in Business & Finance Renting & Real Estate

The game plan is a losing situation for the consumer from the start! The legal citizens of America should seize rule & control over money & rid themselves of congress & the phony banking system!

2007-11-03 06:57:32 · update #1

6 answers

Everyone but the people with the money to lend you thinks that. Good luck.

2007-11-03 06:43:24 · answer #1 · answered by Anonymous · 1 0

Only your mother gives you an interest free loan, everyone else charges interest. Interest is the incentive that lets them loan you money and in turn, loan money to the next person. In more practical terms, this is why you should shop for loans & keep a good credit score, why a down payment is important & knowing how much money you should budget for a home. The idea of a 30 year mortgage is to make the monthy payments acceptable and affordable, if your is too high, then maybe you should rethink the plan. Good Luck.

2007-11-03 14:42:19 · answer #2 · answered by rpf5 7 · 0 0

There is no rule that a larger percentage of your payment couldn't be paid toward your principal, but everyone wants to pay the minimum. Every dollar you pay over the minimum would go to cover principal (if you specifically point it out on your payment!). Without amortization, no one would be able to buy a house unless they paid cash for it. The lending practices are in favor of the consumer. You have to remember that banks simply are not in the business of buying houses for people, but to earn interest on their money just like me and you.

2007-11-03 13:55:34 · answer #3 · answered by linkus86 7 · 0 0

The lender is lending you money for use over a thirty year period. If the early payments were skewed as you suggest, the lender would not even recover his OWN costs for interest in that period.

If you do not want to follow this standard program, then simply work and save enough to pay for a house in cash. (HINT: if you calculate the interest you would have earned on that amount of money in a similar period, I think you will get the picture.)

2007-11-03 14:28:37 · answer #4 · answered by acermill 7 · 0 0

You have the option to include an extra principal payment whenever you want. Doing so reduces the term of the loan, and thusly the interest you pay.

2007-11-03 17:19:42 · answer #5 · answered by Anonymous · 0 0

As long as you know what you are doing, you can choose to do it or not. Do the arithmetic to see how much interest it cost to borrow someone else's money. If you don't like it don't do it.

2007-11-03 13:50:14 · answer #6 · answered by Renaissance Man 5 · 0 0

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