Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
Home prices will come down eventually, but for now; get your money as much as you can, out of the housing market and get into the financial markets or gold. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.
Opting for an investment advisor is currently the optimal approach for navigating the stock market, particularly for those nearing retirement. I've been consulting with a coach for a while, and my portfolio has surged by 45% since Q2.
Sharon Ann Meny , just check her out. It's better to hire a skilled financial planner especially if you're not one yourself. I hired one after my retirement pension took a hit in 2021 April due to the crash.
Even crazier is how much the same home increases in price over the asking without contingencies with more taxes and insurance. But people buy a mortgage not a house.
I have 35% of my capital investments in an IRA, 25% in index funds, and the balance spread across other investment accts totaling over $250k. I took a big hit in Q2, 2023. Right now i am just looking for ways to recover in 2024 and pay off my mortgage before another economic crisis rolls around.
There are a lot of strategies to make profit to clear. your mortgage in this down market, but such sophisticated trades can only be carried out by proper market experts
I agree with you. I started out with investing on my own, but I lost a lot of money. I was able to pull out about $200k after the 2020 crash. I invested the money using an analyst, and in seven months, I raked in almost $673,000
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
Dude! I love your videos. I’m an Agent myself and I am a firm believer that information and being a resource is operating in integrity in this industry. Your a Rockstar man!
Thank you so much bud, I needed the confirmation. I ran the numbers on a home with 7.23% interest and the final pay-off amount was INSANE, I had to double check with a pro to make sure I did my math right. I can't believe it. I will most certainly wait until interest rates come back down before buying.
Best video I've ever seen in explaining mortgage interest rates. Never realized you end up almost paying DOUBLE on the amount of the loan. Kinda feel silly for not knowing that. Makes me want to save and just buy a house in cash. Anyways, thanks and again great video!
I’m happy when I turned 17 I decided for the next 10 years all work on my credit score. Only recently (March 2020) I made the choice to start saving 20% for my downpayment for a house. I only have 4 more years to go. But when I walk into that bank with my 20% down, rocking credit score, and 10 years worth of work history at the same job I think it’s safe to say they will be amazed. I recently got a new car loan and the loan officer was surprised to see my credit card interest rate so low. She was like your rate is lower than what we even offer so I don’t know how you got it 😂 but yea they are already amazed on how much I’ve accomplish financially at the age of 24. Just 4 more years left to working hard and it’ll all be worth it in the end.
That’s great salute to you man . I’m currently trying to educate my self on interest rates & credit cards … any advice on how can i educate my self before i get a credit card ? How did you educate ur self
@@Aj-cd1in I never really educated myself 😅. Maybe just watch ALOT of RUclips videos on it. If there is one thing I suggest that I did it’s get a credit card with the lowest amount they offer. My first credit card only had a $500 limit. Start small and work your way up. That way it’s almost impossible to miss a payment a mess up your credit.
I appreciate you breaking things down the way you do. Althoigh i didnt understand all of it, i will definately rewatch and rewatch and rewatch along with doing more research. Keep these videos coming. They are very helpful in so many ways. Thank you!
My loan officer was really pushing the FHA loan with the 4.5% interest rate so I could "save" $15k but in reality I'd be spending $100k more. So glad I stuck to my gut and insisted on the conventional loan with 3.5% rate.
Just the first 3 minutes already taught me a lot thanks man. been looking for the answer to everything you talked about in this video really help a lot
Great breakdown! Folks he is running numbers through a "loan amortization table" This is a very good thing to have an awareness of because it also applies to auto, student, credit card debt. If you have multiple student loans with multiple balances and different interest rates. 10 minutes of calculations each month can tell you which loan you should pay a little extra on to get the biggest benefit! AND if you're not paying extra....my goodness, skip the morning coffee, Netflix and eating out so you can pay extra. I ran this calculation on my student loans and by making sacrifices/good decisions I saved almost $35,000.00 vs. What I would've paid back if I had just paid what my monthly bill was telling me to pay.
Javier! Stumbled upon you in my “suggestions” funny thing is I live in Glendale Arizona and grew up in south phx. Me and my wife are currently saving up our down payment for our first home purchase !! Anyway I subscribed cause I feel that you being in my area your videos are a great reference for my wife and I ! Thank you for all the info stay blessed brother !
@@jocko1283 bro tell me about it. Almost year from me posting this and I still can’t find a home. All cash buyers and a crazy market gives FTHB no chance. But my lending agent has told me there is about 15-20% decrease in home loan applications so there may be light at the end of this tunnel
Amazing info and thank you so much for breaking down how to as accurately as possible calculate your interest and principal mortgage payment over the life of the loan. You answered the question directly and clearly!
Thank you for this video. I’m about to make my first payment and I was freaking out about the first month interest until I watched you. You are amazing
I never knew any of this the first time I bought a house years ago at 6%. I’m so glad I’m getting the information I need this time around to be smart about home buying.
Thank you Javier this video came just in time. Sometime we focus on a lower mortgage amount despite the interest rate and not calculate the 30 year total amount.
Wow!!! Thanks for this visual, it makes it so much easier to understand home-buying and why getting a good interest rate is so important (2022 I’ll just buy a cardboard box 😭)
Your explanation was brilliant and you have a beautiful recording voice. Please keep your Videos coming. Every minute of time listening to this video time well spent. Thank you.
Really interesting video, well delivered. Quite eye-opening!! Something that's really important to learn and remember. Saved it to my favs to show my gf!
This is the realest video I’ve ever watched! Thank you so much! I have late payments on my report from 2017, I’m preparing, improving and saving now to get a great rate and home in 2024 👍🏾
Hi Javier. Hope you and your family are well and safe😊 Thank you for this video! Very helpful and needed. I wanted to know if you could do a video on how to pay off your mortgage quicker? I was told paying extra towards the principal balance is the best way but I wanted to know your opinion. 😊
Hi, I enjoy watching your videos, it’s been very informational for me. Just trying to educate myself with the home buying process and more...Do you have a video discussing 15 year vs 30 year?
Javier, my man... I appreciate you and everything you’ve done and continue to do for all your followers and newcomers alike. I’ve been wanting to buy a house for over a year now. Is it possible to cover the topic of buying a house with a VA home loan during this pandemic? I know it is a government-backed loan and with the amount of money the government has pumped into the stimulus funds I’m without a guiding light on whether I should take advantage now, later, or ever. Please give US the light, Javier!🙏🏼🙏🏼🙏🏼
@Carmen you have a home inspection to see what needs to be repaired. It takes longer to get a 203K loan. The mortgage company doles out the money to the contractor as the work gets done. The work is reinspected by the inspector. The original appraisal is done as if your house has already been repaired.
Javier, thank you for the wonderful information and helpful graphics that popped up on the screen. The higher production value is definitely appreciated! You explained it in such an accessible way. The dream right now is to save enough money to put a sizable down payment on a home and pay as much in cash as I can... it's amazing how much you spend on interest during the life of a loan!
@ 1:28. That’s barely the out building in Los Angeles when the middle class family home is $1 mili. I know it sux but gotta live this year round weather
Javier, do banks/lenders usually penalize you if you pay your house sooner? Like, if you pay 10k at once into the principal, would that affect you later on?
GREAT video!!! We are at a decision point on a purchase where we may have to take on the cost of doing repairs because it’s a sellers market. However we got a phenomenal rate under 3%. Looking at the big picture, The benefit of locking in a purchase at this rate far exceeds the short term cost of the repairs.
Thank you Javier for the video. Would you mind making a video about the difference between a 15 year mortgage vs. a 30year mortgage. I would greatly appreciate it. My husband and I are wanting to purchase a home in the near future.
Denise Trujillo I would recommend watching Dave Ramsey videos. He always recommends doing a traditional loan, 15 year fixed interest rate. Doing this kind of loan implies you do have about 20% saved as a downpayment on the total house value. If you do that, that’s how you can pay the least in interest long term. The only two downsides are the initial 20% downpayment and higher monthly payments, BUT you paying mostly towards the principal.
Came to find information about interest rates and why they are so important. Right now I have a 3.6% conventional loan and wanted to refi. Refi would get me 80k but jump to an 7% rate on a 420k FHA loan. 265k in equity at the moment. I bailed out of it just recently before it went any further. Just going to spend better and manage better. Thank you for the knowledge you have.
wedge deal, buy new construction, excellent credit=the best rate, 20% down, 6months in reserve and essential occupation is the new norm for purchasing a home during this new era. If not just rent till you have your house in order. This id a perfect time to look your self in the mirror. Awesome content. Huge fan!
Rachel C If I wasn’t so deep in...I would have waited as well. My closing date is in 3 weeks. 🤦🏾♀️. I called my bank and she said that it might be an error on their end because I was locked in at a 4%. So I’m waiting for a call back today.
Hey Javier super dope videos nd very every informative ! Question , currently have home being build loan officer gave us option to lock rate at 4.00% , crazy how things are changing ! My question is would you lock at 4%?
Javier, If I paid additional money on my mortgage each month, would it go to my interest or my principal? Seeing that almost 80% of a payment can go to interest was shocking. Thanks for making this video
Thanks for the info! So how does paying off the mortgage early work? So say I have a 200,000 loan and I've made my first month payment where 77% is going towards interest and the rest is going towards principal. If I made another $500 payment that same month, would all of that go towards my principal? Appreciate the help folks!
Hi, thanks for your videos. My question is, how will it change things if you're paying extra on the principal each month? Let's say about $500 extra. How will that change things over time?
youll have more equity in the house, and if you refi after putting more towards the principle you will be able to refi for a cheaper payment incase you have financially difficulty, if not in financial trouble, you can just keep throwing extra at the principle and pay it off even quicker.
This is huge! Thank you for the knowledge! I would like to further the question and ask how much would you save if you make 1 or 2 additional full mortgage payments a year? That would definitely lower the total interest paid on the loan but how much would it really help. Would it be worth it to make 1 extra payment a year?
It absolutely helps. Especially in the begining. As I'm sure you saw in his example the 1st month you paid $1432 and you only brought your balance down by $432, if you would have paid an extra $1,000 that month your balance would have gone down by another full $1000 that $1k will save you $1719 by the end of the loan. So as you can see, it saves you $719. When you make payments, even small payments, it dramatically helps. It gets less dramatic as you get closer to the end, but it could still save you a lot.
Also if you can overpay every month, that goes straight towards the principal, which lowers how much interest you will be charged and will take away years of your mortgage.
easy way to visualize it is to just multiply the interest rate to the duration: 3% x 30yrs = 90% (of loan value) 4% x 30yrs = 120% thats like a 30% difference/discount essentially
This doesn’t relate to this video but I have a question. Someone I know and I are using the same lender. She is buying a brand new house for around 230k and her payments are around 1350. I am looking in the 180k range and my payments are estimated to be around 1200-1300 for a used house. We got the same interest rate and I had a higher credit score. There is a difference in income but why are my payments around the same as hers and her house is so much more?
The down payment amounts and PMI could affect the payment amounts. Lastly, if the difference is $150 a month, then your friend pays an additional $54,000 over the life of a 30 year loan.
I bought a home in 2018 have a 4.75 interest rate the price was under market value I'm thinking of refinancing I got a offer for 2.80 interest rates should I take this offer or wait a bit?
Awesome video. I have been at my home for 4 years now. 230k home loan. The principle now is 210k. My interest rate is 3.375. My home is probably worth 280k . What should I do ? Refinance? Or keep the loan FHA. Or refinance to conventional. If so what happens to that equity ?
great video thanks, wonder how would it look if you divide the monthly payments in 2? you still paying the same amount at end of month but supposibly it goes better for principal? is that right?
Thanks, this was a good explanation actually. The only thing I'm still confused on is the ration of the interest and the principal, specifically: -What determnies the ratio of the interest to principal at the start of the loan, and also at the end of the loan? For example, I understand that it will be a higher percentage of principal paid with a lower interest rate, but what is the formula to determine this? As in, if the interest rate is 5% then how is the year one of 69% interest and 31% principal decided to be? like how does 5% relate to the numbers of 69% nd 31%? And also why does it change as time goes on and what is the rate/formula for this change?
For some perspective if you took that extra $345.65 every month ($4147.80 a year) that you would save at 3% vs 5% and invested it for 30 years at 10% annual return you’d have ~$750,000 in investments. *THAT’S* the real difference here, sure at 5% you’re paying the bank an extra $125,000 in total compared to 3% but in reality you’re potentially missing out on $750,000 in investments/retirement. Giving that $750,000 another 10 years to grow (say you bought the home at 30, and retired at 70, you’d be left with ~$1,945,000… Just from the difference in your mortgage rate.
Is it true that there is usually a cap on how much your credit score affects your interest rate? For example, do lenders view everything above a +740 the same, or does 740 get your a higher interest than 780? Love the vids! Thanks!
Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
Home prices will come down eventually, but for now; get your money as much as you can, out of the housing market and get into the financial markets or gold. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.
Opting for an investment advisor is currently the optimal approach for navigating the stock market, particularly for those nearing retirement. I've been consulting with a coach for a while, and my portfolio has surged by 45% since Q2.
Sharon Ann Meny , just check her out. It's better to hire a skilled financial planner especially if you're not one yourself. I hired one after my retirement pension took a hit in 2021 April due to the crash.
The cost of a home relative to average household income was way different in 1990’s
Never realized 1% interest rate would make such a huge difference. What an eye opener video. Thank you for making this
Yeah it really does, that why someone pay points to try to get a lower rate.
Pays off to know mathematics.
Even crazier is how much the same home increases in price over the asking without contingencies with more taxes and insurance. But people buy a mortgage not a house.
@@R_Alexander029 thank you for the straight answer. But people won’t understand.
Well thank god I didn't follow my parents advice and take out a mortgage a few years ago. I would be fucked now.
I have 35% of my capital investments in an IRA, 25% in index funds, and the balance spread across other investment accts totaling over $250k. I took a big hit in Q2, 2023. Right now i am just looking for ways to recover in 2024 and pay off my mortgage before another economic crisis rolls around.
There are a lot of strategies to make profit to clear. your mortgage in this down market, but such sophisticated trades can only be carried out by proper market experts
I agree with you. I started out with investing on my own, but I lost a lot of money. I was able to pull out about $200k after the 2020 crash. I invested the money using an analyst, and in seven months, I raked in almost $673,000
I find your situation fascinating. Would you be willing to suggest a trusted advisor you've worked with?
Her name is “Sonya lee Mitchell” can't divulge much. Most likely, the internet should have her basic info, you can research if you like
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
Dude! I love your videos. I’m an Agent myself and I am a firm believer that information and being a resource is operating in integrity in this industry. Your a Rockstar man!
Thank you for this! I’m not even trying to purchase a house, I’m just trying to do an assignment for my homework 🤣
@Jessica m. Same 😂
Thank you so much bud, I needed the confirmation. I ran the numbers on a home with 7.23% interest and the final pay-off amount was INSANE, I had to double check with a pro to make sure I did my math right. I can't believe it. I will most certainly wait until interest rates come back down before buying.
Best video I've ever seen in explaining mortgage interest rates. Never realized you end up almost paying DOUBLE on the amount of the loan. Kinda feel silly for not knowing that. Makes me want to save and just buy a house in cash. Anyways, thanks and again great video!
"the corn man in my hood" lol you just earned a new subscriber.
I’m happy when I turned 17 I decided for the next 10 years all work on my credit score. Only recently (March 2020) I made the choice to start saving 20% for my downpayment for a house. I only have 4 more years to go. But when I walk into that bank with my 20% down, rocking credit score, and 10 years worth of work history at the same job I think it’s safe to say they will be amazed. I recently got a new car loan and the loan officer was surprised to see my credit card interest rate so low. She was like your rate is lower than what we even offer so I don’t know how you got it 😂 but yea they are already amazed on how much I’ve accomplish financially at the age of 24. Just 4 more years left to working hard and it’ll all be worth it in the end.
That’s great salute to you man . I’m currently trying to educate my self on interest rates & credit cards … any advice on how can i educate my self before i get a credit card ? How did you educate ur self
@@Aj-cd1in I never really educated myself 😅. Maybe just watch ALOT of RUclips videos on it. If there is one thing I suggest that I did it’s get a credit card with the lowest amount they offer. My first credit card only had a $500 limit. Start small and work your way up. That way it’s almost impossible to miss a payment a mess up your credit.
I appreciate you breaking things down the way you do. Althoigh i didnt understand all of it, i will definately rewatch and rewatch and rewatch along with doing more research. Keep these videos coming. They are very helpful in so many ways. Thank you!
I didn't understand much either n plus he is talking too fast...smh
@@b.allison8761 you could slow it down in the speed settings. -75 is slow.
I think some people just need a better explanation. Or different.
My loan officer was really pushing the FHA loan with the 4.5% interest rate so I could "save" $15k but in reality I'd be spending $100k more. So glad I stuck to my gut and insisted on the conventional loan with 3.5% rate.
It’s crazy how you pay 1500 a month and 1000 goes to interest. And 500 to principle. Banks never lose.
I just want to say I appreciate you! You really make this complicated purchase, easy to digest
Sir, thank you so much. I am going through my first mortgage and thanks to you a feel so much better. You have no idea how much I thank you.
Just the first 3 minutes already taught me a lot thanks man. been looking for the answer to everything you talked about in this video really help a lot
Great breakdown! Folks he is running numbers through a "loan amortization table" This is a very good thing to have an awareness of because it also applies to auto, student, credit card debt.
If you have multiple student loans with multiple balances and different interest rates. 10 minutes of calculations each month can tell you which loan you should pay a little extra on to get the biggest benefit! AND if you're not paying extra....my goodness, skip the morning coffee, Netflix and eating out so you can pay extra.
I ran this calculation on my student loans and by making sacrifices/good decisions I saved almost $35,000.00 vs. What I would've paid back if I had just paid what my monthly bill was telling me to pay.
Often student loans and auto loans are simple interest. At least mine were. Therefore this doesn’t apply to them.
Thanks for sharing this!
This is why it’s important to pay extra towards your principal early. Also try to get a 15 year loan.
What about a balloon mortgage in 5
Javier! Stumbled upon you in my “suggestions” funny thing is I live in Glendale Arizona and grew up in south phx. Me and my wife are currently saving up our down payment for our first home purchase !! Anyway I subscribed cause I feel that you being in my area your videos are a great reference for my wife and I ! Thank you for all the info stay blessed brother !
Thanks Daniel! 🙏🏼
@@jocko1283 bro tell me about it. Almost year from me posting this and I still can’t find a home. All cash buyers and a crazy market gives FTHB no chance. But my lending agent has told me there is about 15-20% decrease in home loan applications so there may be light at the end of this tunnel
Dude u explained this so well and in depth i couldnt wrap my hear around it with any other video, you're the best thank you!
I just refinanced after 4 years. Went from a 30 year at 4.25 down to a 15 year at 2.87 and got rid of pmi
Chevy Guy congrats!!What state do you live at?
Liz Vega Illinois. Now if only property taxes were low
What lender did you use?
Good idea
My interest rate is 2.375%. I'm never going to sell this house now! Lol
Amazing info and thank you so much for breaking down how to as accurately as possible calculate your interest and principal mortgage payment over the life of the loan. You answered the question directly and clearly!
great breakdown!! Glad I switched lenders in the process of buying that took me from a 4% interest rate to a 3%
Thank you for this video. I’m about to make my first payment and I was freaking out about the first month interest until I watched you. You are amazing
This is awesome! Can't thank you enough for simplifying this matter! You rock my brother!
Thank you so much sir ❤ I love in Asia they said 6% is nothing lol but you opened my eyes 😢i really appreciate you.
I never knew any of this the first time I bought a house years ago at 6%. I’m so glad I’m getting the information I need this time around to be smart about home buying.
Greatly appreciate your time in explaining this.. had too rewind a few times to get the full breadth, but excellent work!
really did a good job explaining this to me....I just refied my home from 4.625 to now 3.625... thanks
That was the rate I got 4 years ago.
I just got 2.75% on 30 year I’m guessing that’s good but 2% would be better. update just got 2.25% on 15 year Loan
@@mplscarsales6652 That’s fanstastic! We just got pre approved with %3. Did you negotiate to get that lower interest?
Great video! Ive learned more watching this than talking to people over the last year! Thank you so much!
Great and informative video. I appreciate you breaking it down opening my eyes for how important a lower interest is for the loan
Thank you Javier this video came just in time. Sometime we focus on a lower mortgage amount despite the interest rate and not calculate the 30 year total amount.
Wow!!! Thanks for this visual, it makes it so much easier to understand home-buying and why getting a good interest rate is so important (2022 I’ll just buy a cardboard box 😭)
Your explanation was brilliant and you have a beautiful recording voice. Please keep your Videos coming. Every minute of time listening to this video time well spent. Thank you.
Really interesting video, well delivered. Quite eye-opening!! Something that's really important to learn and remember. Saved it to my favs to show my gf!
Great video. I wish you would've talked about extra principal payments and how much that actually helps.
You explain it so well!! I never understood how mortgage worked 😭 thank you!!!
This is the realest video I’ve ever watched! Thank you so much! I have late payments on my report from 2017, I’m preparing, improving and saving now to get a great rate and home in 2024 👍🏾
Thanks for the video and information! Can you explain how you got the principal payment of $432 for the first month?
Same i am confused too
Hi Javier. Hope you and your family are well and safe😊 Thank you for this video! Very helpful and needed. I wanted to know if you could do a video on how to pay off your mortgage quicker? I was told paying extra towards the principal balance is the best way but I wanted to know your opinion. 😊
I used that formula to calculate my payments, and the amount of interest came out exactly right. Thank you. Now I actually understand how this works
Have you done a video on refinancing and if/when you should? If not, can you do one? Thankssss
Wow, that was awesome information! Especially for first time buyers! Thank you!
Hi, I enjoy watching your videos, it’s been very informational for me. Just trying to educate myself with the home buying process and more...Do you have a video discussing 15 year vs 30 year?
If you’re an investor never do a 15 year.
Thank you so much! This helps me alot. I just refinance my home for a lower interest rate. Hopefully get to close soon! Thank you Javier!
Javier, my man... I appreciate you and everything you’ve done and continue to do for all your followers and newcomers alike. I’ve been wanting to buy a house for over a year now. Is it possible to cover the topic of buying a house with a VA home loan during this pandemic? I know it is a government-backed loan and with the amount of money the government has pumped into the stimulus funds I’m without a guiding light on whether I should take advantage now, later, or ever. Please give US the light, Javier!🙏🏼🙏🏼🙏🏼
Greetings from Vegas, I'm new to your channel. I'm from phx as well. Great video, I look forward to your other content!
@Carmen you have a home inspection to see what needs to be repaired. It takes longer to get a 203K loan. The mortgage company doles out the money to the contractor as the work gets done. The work is reinspected by the inspector. The original appraisal is done as if your house has already been repaired.
Javier, thank you for the wonderful information and helpful graphics that popped up on the screen. The higher production value is definitely appreciated! You explained it in such an accessible way. The dream right now is to save enough money to put a sizable down payment on a home and pay as much in cash as I can... it's amazing how much you spend on interest during the life of a loan!
@ 1:28. That’s barely the out building in Los Angeles when the middle class family home is $1 mili. I know it sux but gotta live this year round weather
Javier, do banks/lenders usually penalize you if you pay your house sooner? Like, if you pay 10k at once into the principal, would that affect you later on?
I want to know too because I would like to put more towards the principal and pay it off a bit sooner
You can check with your bank, my bank said there was no penalty for early payoff
I did see that it is more beneficial to pay a little extra each month than one big lump sum one time a year.
Can you breakdown the impact of having an extra payment or more extra payments towards the principal?
GREAT video!!! We are at a decision point on a purchase where we may have to take on the cost of doing repairs because it’s a sellers market. However we got a phenomenal rate under 3%. Looking at the big picture, The benefit of locking in a purchase at this rate far exceeds the short term cost of the repairs.
Thank you Javier for the video. Would you mind making a video about the difference between a 15 year mortgage vs. a 30year mortgage. I would greatly appreciate it. My husband and I are wanting to purchase a home in the near future.
Denise Trujillo I would recommend watching Dave Ramsey videos. He always recommends doing a traditional loan, 15 year fixed interest rate. Doing this kind of loan implies you do have about 20% saved as a downpayment on the total house value. If you do that, that’s how you can pay the least in interest long term.
The only two downsides are the initial 20% downpayment and higher monthly payments, BUT you paying mostly towards the principal.
Came to find information about interest rates and why they are so important. Right now I have a 3.6% conventional loan and wanted to refi. Refi would get me 80k but jump to an 7% rate on a 420k FHA loan. 265k in equity at the moment. I bailed out of it just recently before it went any further. Just going to spend better and manage better. Thank you for the knowledge you have.
Thanks for sharing ! It's really help a lot to understand about interest rates! Just 😍it!
Thanks for the video. Is there a calculator I can use to plug in my specific numbers, or did you do the “long math” by hand?
Wow this was an awesome video my friend. I really learned a lot!!!🙌
this video helped me understand interest rates so much better
wedge deal, buy new construction, excellent credit=the best rate, 20% down, 6months in reserve and essential occupation is the new norm for purchasing a home during this new era. If not just rent till you have your house in order. This id a perfect time to look your self in the mirror. Awesome content. Huge fan!
Live in Illinois
I’m deep in the process of buying a home. When I started I was at 4% now it’s up to 5%...I thought I was locked in but clearly I wasn’t 🤦🏾♀️
Higher risk for the lender right now
Doors067 Well dang...😩😩😩
JOURNEYMYLOCS I decided to wait, I was pre approved and one thing and that interest rate changed. I will wait until at least October.
Rachel C If I wasn’t so deep in...I would have waited as well. My closing date is in 3 weeks. 🤦🏾♀️. I called my bank and she said that it might be an error on their end because I was locked in at a 4%. So I’m waiting for a call back today.
@@journeymylocs8702 please fight it! You were told 4% so it needs to STAY 4%.
Hey Javier super dope videos nd very every informative ! Question , currently have home being build loan officer gave us option to lock rate at 4.00% , crazy how things are changing ! My question is would you lock at 4%?
Javier, If I paid additional money on my mortgage each month, would it go to my interest or my principal? Seeing that almost 80% of a payment can go to interest was shocking. Thanks for making this video
When you make additional payments, you can make "principal only" payments.
@@AngelequeBowen thanks 😊
Thanks for the tips. Helped me understand a lot about the system
The best explanation I've seen, thus far; with real numbers.
Thanks for the info! So how does paying off the mortgage early work? So say I have a 200,000 loan and I've made my first month payment where 77% is going towards interest and the rest is going towards principal. If I made another $500 payment that same month, would all of that go towards my principal? Appreciate the help folks!
Was gonna ask the same question.
@Ketchup303 Appreciate it!
Hi, thanks for your videos. My question is, how will it change things if you're paying extra on the principal each month? Let's say about $500 extra. How will that change things over time?
youll have more equity in the house, and if you refi after putting more towards the principle you will be able to refi for a cheaper payment incase you have financially difficulty, if not in financial trouble, you can just keep throwing extra at the principle and pay it off even quicker.
This is huge! Thank you for the knowledge! I would like to further the question and ask how much would you save if you make 1 or 2 additional full mortgage payments a year? That would definitely lower the total interest paid on the loan but how much would it really help. Would it be worth it to make 1 extra payment a year?
It absolutely helps. Especially in the begining. As I'm sure you saw in his example the 1st month you paid $1432 and you only brought your balance down by $432, if you would have paid an extra $1,000 that month your balance would have gone down by another full $1000 that $1k will save you $1719 by the end of the loan. So as you can see, it saves you $719. When you make payments, even small payments, it dramatically helps. It gets less dramatic as you get closer to the end, but it could still save you a lot.
Great video! It's very useful for me to share with my clients.
Also if you can overpay every month, that goes straight towards the principal, which lowers how much interest you will be charged and will take away years of your mortgage.
Hi Javier,
how do you calculate $432 as the principal amount?
JAVIER, awesome explanation about the interest rate, indeed it is a complex topic! Is there any thoughts for the APR vs IR yet?
easy way to visualize it is to just multiply the interest rate to the duration:
3% x 30yrs = 90% (of loan value)
4% x 30yrs = 120%
thats like a 30% difference/discount essentially
This doesn’t relate to this video but I have a question. Someone I know and I are using the same lender. She is buying a brand new house for around 230k and her payments are around 1350. I am looking in the 180k range and my payments are estimated to be around 1200-1300 for a used house. We got the same interest rate and I had a higher credit score. There is a difference in income but why are my payments around the same as hers and her house is so much more?
The down payment amounts and PMI could affect the payment amounts. Lastly, if the difference is $150 a month, then your friend pays an additional $54,000 over the life of a 30 year loan.
great video Javier and thanks for making a huge impact on so many! :)
Should I invest my money, or try to pay off the home ASAP? I loved your math explanation!
I have a question for you. What if I write a separate check each month to apply to the principal?
Thanks for the info. you are golden my brother!
"Young Cuties here" was priceless bro! Thank you so much for this info!!!
This was sooo informative!! Thank you!!!
I bought a home in 2018 have a 4.75 interest rate the price was under market value I'm thinking of refinancing I got a offer for 2.80 interest rates should I take this offer or wait a bit?
Never looked at ratio between P&I before; very insightful!
Are "locked in" interest rates really reliable these days?
This video was great. Helps a lot.. thank you
😊
Awesome video. I have been at my home for 4 years now. 230k home loan. The principle now is 210k. My interest rate is 3.375. My home is probably worth 280k . What should I do ? Refinance? Or keep the loan FHA. Or refinance to conventional. If so what happens to that equity ?
great video thanks, wonder how would it look if you divide the monthly payments in 2? you still paying the same amount at end of month but supposibly it goes better for principal? is that right?
Thanks, this was a good explanation actually. The only thing I'm still confused on is the ration of the interest and the principal, specifically:
-What determnies the ratio of the interest to principal at the start of the loan, and also at the end of the loan? For example, I understand that it will be a higher percentage of principal paid with a lower interest rate, but what is the formula to determine this? As in, if the interest rate is 5% then how is the year one of 69% interest and 31% principal decided to be? like how does 5% relate to the numbers of 69% nd 31%? And also why does it change as time goes on and what is the rate/formula for this change?
This helped me understand very much thanks
Great video! Could you do another on what happens when you pay 100, 200 and 300 extra each month towards principal
This was very helpful thank you!!
For some perspective if you took that extra $345.65 every month ($4147.80 a year) that you would save at 3% vs 5% and invested it for 30 years at 10% annual return you’d have ~$750,000 in investments.
*THAT’S* the real difference here, sure at 5% you’re paying the bank an extra $125,000 in total compared to 3% but in reality you’re potentially missing out on $750,000 in investments/retirement. Giving that $750,000 another 10 years to grow (say you bought the home at 30, and retired at 70, you’d be left with ~$1,945,000… Just from the difference in your mortgage rate.
I really can't understand the principal , is it the base amount divided by 360 months ?
Thank you for the video man!
Thanks for doing the math! Great viddy. What if I pay $100 -$500 extra each month? How'd that help?
How did you determine the principal ? What’s the formula?
Thanks
Very informative thank you for breaking it down
Amazing Video, thank you so much!
Thanks man you broke that down very well 👌🏾
Is it true that there is usually a cap on how much your credit score affects your interest rate? For example, do lenders view everything above a +740 the same, or does 740 get your a higher interest than 780? Love the vids! Thanks!
Alexandro Rodriguez I cant remember if the number is 740 or 760 but yes generally speaking anything higher won’t benefit you much more if any
Very informative! Just subscribed!