So Mote It Be.... ?

That they have eyes yet do not see ......






 Consider the following .



 You purchase a house for $300,000 at 7.5 % interest on a 30 year fixed loan.

• Every month your mortgage is $2,097.64
• Interest paid to the lender on the first payment - $ 1,875 : amount paid to reduce the outstanding principal - $222.64.
• Total interest received by the lender from YOU at the end of 30 years - $455,151.67.

The breakdown after 5 YEARS :

• interest paid to lender - $109,710.92
• amount of principal reduced ( which is the same as saying " value of equity " ) -$16,147.69
• This reduction amounts to  equity of approximately 5 %.
• remaining principal - $283,852.31

 If you were the homewoner in this case , would the lender allow you to refinance after 5 years?
  If so , bear in mind all the fees associated such as title insurance to name just one.

  Throughout this economic downturn EVEN prior to such , lenders have been reaping what I consider HEINOUS profits at your expense.

 What's one to do , to level the playing field ?

 Perhaps ............ a ... mortgage modification ? ( ay ? )


 
 One doesn't have to modify at the threat of foreclosure or bankruptcy . One can be current and with persuasive motivation to the lender ,
A MORTGAGE CAN BE MODIFIED TO THE GREATER BENEFIT OF THE BORROWER.

                   ( if you don't mind ? )





 Let's review the figures from the top of the page.

•  monthly mortgage - $2,097.64
•  remaining principal after 5 years of payments - $ 283, 852.31

 In the fifth year, how about going to the lender to negotiate a modification to start at the beginning of year 6 by leaving the term intact yet changing the interest rate to 6.5 % and the principal to $283, 852.31? The following now occurs :

• monthly mortgage - $1,794.14
• monthly savings -   $303.50
• of the new monthly sum of $1,794.14 , $256.61 is the new amount each month going towards reducing the principal.

 Here is where my plot thickens !!!!

 Instead of paying the new monthly amount of $1,794.14 , you continue to pay the old figure of $2,097.64 FOR YEARS 6 TO 10 with the extra $303.50 separately designated towards reducing the principal !

                           MADNESS YOU SAY .......... RIGHT ?

Follow me :

• $283,852.31 @ 6.5 % from years 6 to 10 would give you $18,135.39 in principal paid off by itself.
• add the $303.50 per month for the years 6 to 10 , provides an additional $18,210.00
• therefor, in a 5 year span your reduction in principal is $36,345.39 instead of $18,135.39
• tack on the $36,345.39 to the $16,147.69 from the first 5 years and the grand total of reduced principal is $52,493.08 after 10 years with this " revised " payment plan.

 Had you kept paying the amount you were doing originally - $2,097.64 a month with 7.5 % on $300,000 , your reduction in principal after 10 years is $39,615.04.




                                     $52,493.08
                                   - $39,615.04
                                    ___________
                                     $12,878.04 more you've added in equity !





  Do your own research with these figures . Talk to an expert in the field of mortgage financing and have them crunch the numbers.

   Let's compare notes and discover whether this could TRULY be of benefit to all concened.


                                




 for the defining moment





 ( I remain )

  Appreciatively yours,

  Gavin St. Clair