How to Buy a House

Easy-Qualify loan in Austin

0% down

Michael Bluejay (the author of the website) is offering loans to homebuyers in Austin, Texas. Here are the terms:

Your credit does not matter, but your ability to pay does.
No down payment is required, though you can make a down payment if you like, in order to lower your monthly payments.
Your monthly payment will be about 1.15% of the purchase price, including closing costs, taxes, insurance. (e.g., on a $100,000 home, the payments would be about $100,000 x 0.0115 = $1150/mo.).
The interest rate is 10%, and I do not require private mortgage insurance. We'll roll most of the closing costs into the mortgage, so they'll be part of your monthly payment, and you won't have to come up with a bunch of closing cost money at the time of the sale.
If you already have a high-interest mortgage and would like to refinance at 10% for 30 years, I can do that too.
These loans are available for homes in Austin, Texas only.

If you're able to get a bank loan you should do so, because the interest rate will be lower. My program is intended for people who cannot get a loan from a bank.

Note that you're not married to the higher interest rate forever. If you start fixing your credit with my credit repair instructions, you should have good enough credit to move your loan to a bank in two years -- and get a lower interest rate.

Contact me at
(512) 322-0638
or use the form below.

Prepaying your mortgage

On our page about compound interest, we saw that a 15-year loan saves you a bundle of interest vs. a 30-year loan. But maybe you're stuck with a 30-year loan because that's all the bank will give you, or because you already bought a house with a 30-year loan. In that case, you can still save on interest by making prepayments on your mortgage. That means paying a little extra each month so that you pay off the whole loan faster. Actually, you don't have to pay extra each month -- you can pay extra only in the months you feel you can afford it. But if you're able to pay extra each month, you'll pay your loan off even faster and save even more interest.

Why prepay?

The whole point of prepaying your mortgage is to pay off your loan sooner, and to save on interest. The sooner your loan is paid off, the sooner you can stop making monthly payments. And the interest you save is as good as interest you could have made in separate investments. If you invest in the stock market you never know what kind of return you'll get. But if you have a 7% mortgage, then every dollar you prepay gives you a 7% return. In fact, prepayments worth a little more than separate investments, because income you make from separate investments is taxable, while interest you save by prepaying your mortgage is not.
The only downside of prepaying your mortgage is that it ties up your cash. If you take the money you would have used to prepay your mortgage and invest it in something else, then you'll be able to easily access that cash in case of an emergency. If you prepay your mortgage, your equity is locked up in your house and it's not so easy to access it. You can't easily spend your house.

But as long as you have sufficient savings, I believe it's a good idea to prepay your mortgage (and most financial advisors agree).

How to make prepayments

Making prepayments is easy.Whether you're paying by check or online, there's usually a blank to write in how much extra principal you want to pay. (If not then contact the bank and ask them how to prepay.)
It's really unlikely that your mortgage argreement requires any kind of prepayment penalty, but it couldn't hurt to check it to make sure.

How much should you prepay? That depends on how much you can afford, and how quickly you want to pay off your loan. This calculator shows how much prepayments can shorten your loan and save you on interest.

Balance left on loan

$

Interest rate

%

Current monthly payment

$

Extra paid each month
Years to Pay Off Interest Paid Interest Saved

$0
$ $

$50
$ $

$100
$ $

$
$ $

Should you pay off your mortgage early?

Most financial advisors agree that it's a good idea to prepay your mortgage to save on interest and accelerate your payoff date, regardless of whether you have a 15- or 30-year note. But they don't always agree on how much you should prepay. The Get Rich Slowly blog runs down the conflicting advice from the experts:

Your Money or Your Life book: Pay off early
Suze Orzman: Pay off early
Charles Givens: Pay off early (prepay next month's principal to pay off the loan in half the time)
Dave Ramsey: Pay off early, but put 15% of income towards retirement savings first
All Your Worth book: Pay off early, but put only 5% of your income towards prepayments
Ordinary Wealth, Extraordinary People book: Don't pay off early

On a separate page I explain the concept of taking the cash you would have spent on prepayments and investing it in something else (and conclude that it's not all it's cracked up to be -- prepayments are usually better).

Related topics:

Updated: July 2007

If you liked this site then you might like some of my other sites:

How to Find Cheap Airfare How to Save Electricity How to get listed & ranked well in Google