Why can’t home loans be more like auto loans?
Posted by: info | February 22, 2007
Is it me or does it seems as if an automobile loan is better than a home loan? For example if you finance a car worth $40,000 at 7% interest rate your monthly payment would be $792.05. This is on a loan term for 5 years probably the most common. Here is the difference.
So if you took $80,000 and financed it for 10 years your payment would be $928.87. Now in 10 years you will own the automobile. Here is the home loan situation. If you finance 80,000 over 30 years at 7% interest your monthly payment would come out to $532.24 not including taxes.
So you pay less than $400 more a month for the car but you pay it off 3 times as fast. 10 years instead of 30 would be a lot better. Not to mention more people would own their homes instead of financing them. This would give better meaning to the word home ownership.
The front end of home loans are almost all interest. I am in the 4 year of paying off my home and last year I only paid $800 towards the balance. This just don’t seem right. If I was paying for a car, the shorter time forces me to pay more off the balance each year. This would seem to be a better situation in general. In the long run the loans would come out the same if they had the same interest rate and monthly payment. I am a big fan of shorter pay off times and this is only my personal opinion.
Posted in: Mortgages, General |
3 Responses to “Why can’t home loans be more like auto loans?”
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June 8th, 2007 at
Auto loans do seem to get paid off a lot faster. Most people have to wait 30 years to pay off their home.
June 27th, 2007 at
To be honest, a home loan is better for me. They offer lower payments.
July 9th, 2007 at
A loan is a loan.