1 - Discussion Topics

Real Estate: Low Interest Rate Scamboozel

June 26, 2015 by SiteAdmin

Consumers are being robbed, left right and center, even when trying  to buy a home, and the thieves will continue to get away with it because the people don't seem to care so long as they are able to keep up with the jones' and keep on putting on the image with big house, big car, big car, etc. And while most will keep on complaining they will keep pouring money into the hands of the thieves, and keep on being suckered into the low interest rate sham .

Grab a mortgage calculator and chk this out. I used this one https://www.tdcanadatrust.com/mortgagePayCalculator.form?lang=en

In the past we had lower priced homes but higher interest rates...you might buy a home for lets say 100,000 with 10 % interest rate, So lets work out this mtg.. lets use 10 % interest, 20 yr amortization, 5yr term
The Mthly payments would be 951.66, and the
Interest amount for whole term 46,701.82
If you just sat there and paid it out the home would end up costing you 146,701.82.

HOWEVER... back in the day of higher interest rates, we always had the ability to make lump sum payments to reduce the principal, and therefore reduce the amount of overall interest we had to pay, so it was quite feasible that you could end up buying the house
for less than the whole 146,701.82

These days, we're all swamped with these fantastic offers of LOW LOW interest rates, but it is not being done for the benefit of us the consumers... it is because the interest amount we calculated above is now built right into the purchase price.
ie. a home that would normally sell for 100,000 with 10 percent interest is now 147,000 with low interest rates, lets say 3%

So lets work out the low low interest rate sham...
Using 3% rate, 5yr fixed, 20yr amort.
Mthly payments $815.26
Interest cost per term: $19,972.46

Total cost of the home with low low interest rate: 166,972.46
Now even if you did pay down the principal over time, in the end it's a pretty sure bet you
are still gonna pay at least $147,000.00 minimum for this house.

Same situation works out on all these "low interest rate" loan scams.

2 - Email A Comment