Wednesday, March 01, 2006

Big Bad Mortgages

I disapprove of government intervention, but where are the consumer protection people? Mortgages are getting ridiculous and dangerous.


[Thanks to spookshop.com for the image.]

Rob Peebles over at Prudent Bear cites some interesting figures:

"Total interest paid on a 30-year mortgage loan of $300,000 at 6%: $347,515
Total interest paid on a 40-year mortgage loan of $300,000 at 6%: $492,308

"Amount monthly payment is lowered by going the extra 10 years: $148
 
"A borrower who turns 60 when his 30-year mortgage is paid off, will turn 70 by the time he pays off the 40-year version.

"Reduction of principal on the 30-year loan after 10 years: $49,000
Reduction of principle on the 40-year loan after 10 years: $25,000, and it takes almost 30 years to cut the principal balance in half."

Then you've got the interest-only crap, the negative amortization deals and the "choose your payment" shenanigans.

Scary stuff. Read Rob's not-so-funny piece here.

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