July 9th, 2007

humbug

Is this a good deal?

A commercial for a certain kind of home mortgage was playing on the TV. I hadn't paid any attention before, but it caught my eye just now. The company is offering a $200,000 loan with monthly payments of $999. Maybe that sounds like a good deal, but at the end of thirty years (the term of the loan), one would have paid a total of $359,640, for a total interest of nearly eighty percent (80%). Sheez.

I had always heard that by the time one had paid off a mortgage, one had paid for the house three times: once in principal, once in interest, and once in taxes and insurance. How right that is.