Sarah, Other/Just Looking in Matherville, IL

im not really understanding the loan stuff. i will be a first time buyer and i really dont understand how the payments work on a 30 year fixed loan.

Asked by Sarah, Matherville, IL Wed Mar 3, 2010

My boyfriend and I area looking into the House that is for sale in Matherville. We arent really sure how the loan and loan payments work. We are looking to get out of a bad situation in the place we are now, and trying to start a new life with our 4 month old son. Please Help!!

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5
Bradley Egge…, Mortgage Broker Or Lender, Palatine, IL
Wed Mar 3, 2010
Sarah,

It's great to see another from north central Ilinois on Trulia. I grew up not far from you in Princeton (IL), though I do live in the Chicago area now.

I'd recommend talking to an experienced mortgage professional. He or she can help you understand and answer all of your questions. A good mortgage person will take the time to educate you in the process. I am available if you would like to call. Or you can request a free consultation at my website: http://www.bradleyeggers.com

Though I am in Chicago, we have the best in technology to send you all loan application pages, documents, and disclosures electronically and securely.

Bradley Eggers
Loan Originator
Ardain Mortgage Corp
847-963-1000
bradley.eggers@ardain.com
Web Reference:  http://www.bradleyeggers.com
1 vote
Dan Chase, Home Buyer, Texas City, TX
Wed Mar 3, 2010
Amortization gives your answer. It takes about 5-6 years to pay off the realtor fees paying off a 5% 30 year mortgage.

In the blog below it gives you an easy way to figure out of it makes more sense to rent or to buy.
http://www.trulia.com/blog/dan_chase/2010/01/does_it_make_mo…

Most importantly it shows the amortization table at 5% and what effect it has on your building equity in your house. You may be shocked at how little of your mortgage payment goes toward the money you owe the first few years.
0 votes
Don Tepper, Agent, Burke, VA
Wed Mar 3, 2010
On a 30 year fixed rate loan, your payment for the mortgage (the principle and interest) will remain the same throughout the 30 years. What happens is that in the first few years, you're mostly paying interest. As the years go by, more of your fixed payment goes to the principle (the amount you actually owe) and less to interest.

For example, on a 30 year fixed rate loan--let's say it's a $100,000 loan and you're paying 5% interest--you'd pay $586.32 a month. In the first year, you'll pay $4,966.49 in interest and $1,475.37 in principle (reducing your mortgage.

In year 10, you'd be making the same $586.32 a month payment, but in year 10 you'll pay $3,887.60 in interest and $2,554.26 in principle

In year 25, you'd be making the same $586.32 a month payment, but in that year you'll pay only $1,305.68 in interest and $5,136.18 in principle.

In year 30, you'd be making the same $586 a month payment, but in that final year you'll pay only $171.13 in interest and $6,270.73 in principle.

However, your actual mortgage payment is usually made up of 4 things: principle, interest, taxes, and insurance. (Sometimes you'll see it shortened to "PITI.") Insurance will probably go up a bit each year. The thing that'll raise your total monthly payments, though, will be the real estate taxes. So your actual payment with those 4 things might start out close to $700 a month, and then gradually rise from there.

There's a very useful mortgage calculator at http://www.mortgagecalculator.org/ You can plug in your own numbers to see what your payments would be.

Hope that helps.
0 votes
Patrick Thies, Agent, Anytown, IL
Wed Mar 3, 2010
You can speak to any lender and they would be happy to explain the loan process to you. There are many different types of loans and terms.

A typical 30 year fixed mortgage can be made up of the loan amount plus a tax escrow, home owners insurance, PMI (if you put less then 20% down) and interest. The interest rate will remain fixed for the length of the loan. (As opposed to an adjustable rate that will change according to the terms of the loan).

Conventional loans usually require 10% down while an FHA loan may only require 3.5% down.
Most lenders require Primary Mortgage Insurance (PMI) if you put less then 20% down. This is based on the loan amount.

You should first speak to a lender to find out if and what you can afford to buy before looking at houses. Ask your friends and family for someone that can help walk you through the loan and explain things to you. Best of luck.
0 votes
Elva Wormley, Mortgage Broker Or Lender, San Jose, CA
Wed Mar 3, 2010
Hi Sarah,

The best advice I can give you is ask someone you trust to refer you to an experienced mortgage professional in your area.

Best wishes,
Elva
0 votes
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