The trend is to seek a "better life" by moving to a bigger and better home every 5 years or so. People erroneously believe that this is actually helping them move up the economic ladder when it fact it is just returning them to the bottom rung. In the first 5 year of your mortgage 80% of the payment goes to interest. So, if you are moving on an average of every 5 years then of all of the money that you have paid on your home only 20% has gone to build up equity.
With a $200,000 mortgage at 6% interest, the payment of principal and interest is $1199.00. With the first payment, $199.00 goes to principal and the rest goes to interest.The principal payment creeps up very slowly with month 2 including only an additonal $1.00.
Being a real estate appraiser 8-10 years ago, I realizedthat the mortgage companies that I provided serve to were not happy with the values of the homes that I appraised. As a person of character it was hard to work under those strains and in the end I had to stop working in that industry. The hand writing was on the wall for the future of our economy.
Forclosures are higher than they have been for a long time, and people are out of work. Many people could have kept their homes. However, they did not realize that there is a way to accelerate the pay off of their mortgage without refinancing or even changing their monthly payments. Many of them just did not see a way out.
Some very scary statistics are that in 1992, 18% of people ages 65 - 74 still had house payments. By 2004, that percentage had risen to 32%. And in 2007 -- the most recent year available -- 43% of 65- to 74-year-olds had a mortgage. When are they going to retire?
Not only are they still in debt, the levels have continued to grow. As stated in 2007 dollars, in 1992 the median debt load carried by this same group of folks was $24,609, 15 years later that amount had grown to $69,000. We all know that credit-card debts have grown, but luckily not by as much. In 2007, 37% of 65- to 74-year-olds had a credit-card debt, up five percentage points from 1992. The bad thing is that the amount owed had tripled to $3,000.
If you can pay it off, debt is not always a bad thing. When looking at the ratio of debt to income, the banks put up a yellow flag when your debt reaches over 40% of your income. Over eleven percent of retirees 65-74 reached that threshold which was up from 4% in 1992. This is staggering, and something that we need to do something about.
If there is a better way, then they better find it soon. There is a way to pay off their mortgage in a faction of the time,, they need to find it now.
They need to go to Pay Off Your Mortgage and learn how to save their retirement now.
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Kathy is helping people become debt free in a faction of the time, if you would like to see how follow this link:Pay Off Your Mortgage
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