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Real Estate Investing
How To Afford Your Mortgage Payment
Are you are struggling to afford your mortgage payment? Is the bank is telling you that your income isn't high enough or that your loan is too big? There are answers!
The reason the bank is telling you that is because they are looking at your available monthly income ($1000) and comparing it to the requested loan amount ($1200) which appears to them that you can't afford it. So what do you do?
Well there are a number of other interest options to choose from such as ARM rates and an interest only loan. Each of them offer different interest rates based on their level of risk.
You can get a 1 year ARM rate with a low interest rate compared to a 10 year ARM rate with a higher rate. That means that the mortgage payment is fixed for the first year (or first 10 years) and the adjusts per year after the fixed portion.
The lowest mortgage payment option available is the interest only loan. The reason for that is that you're not paying any principal which means you're not paying down your mortgage at all. You are simply paying the bank all interest because you're borrowing their money.
The more principal you pay the less interest you pay the next month. You can see the details of that with an amortization schedule that is usually attached to a mortgage calculator. Amortization schedule calculators figure out the amount of interest and principal in each payment so that you don't have to.
If you already have a mortgage and need to save money on it then you have options as well. You can refinance to one of these adjustable rate mortgage for a better interest rate. Most likely you can refinance to a better fixed rate then you already have as well because interest rates are very low right now.
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