Author: Dennis Estrada
Mortgage Lenders offers a special scheme in which borrower only pay the interest. With
interest only mortgage , there is no amount that goes to pay off the principal. The borrower pays lower mortgage payment. This scheme is perfect for real estate investor and homeowners who do not wish to stay for long on the house. You can claim the interest on your income tax, since the interest is an expense for investment.
Combating high home prices
The interest only mortgage was created to combat high price of home. On a $250,000 principal, 5% interest rate, and 30 year amortization, the typical
mortgage monthly payment comes to $1,461.48. With interest only mortgage, you only pay $1,041.67. You save $419.81.
Investing to your future
Sum up your monthly savings on
interest only mortgage in a year. In one year, you save $5,037.72 ($419.81 interest only payment * 12 months). If you choose to invest on your property such as hardwood floor, it greatly increases the value of the property. If you choose to invest on mutual funds, bonds, stocks, and income trust, you money compounds to great profitability.
Monetizing your property
Real estate property appreciates or increases in time. Real estate cycle is five years. Every five years, the real estate property appreciates or depreciates. If you buy the property on the right time, you can deeply benefit from
Interest Only Mortgage . Let us take for example the Vancouver real estate market in Canada. In 2010, A Winter Olympics will be held in Vancouver, Canada. Real estate property appreciates in value. A one bedroom condo is worth $120,000 in 2000. After six years, the one bedroom condo is worth $240,000. That is a $120,000 profit. Multiply your profit by 10 real estate property. That makes you a millionaire.
About the author: Dennis Estrada is a webmaster of mortgage calculators which calculate the mortgage payments, and compare different interest rates.
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