75000repayment mortgage taken out over 20 years @

[mistletoe]

rate of 11.1%. What is the annual repayment? the answer is 9480. That means 9480 * 20 -- total payment is 189600????????? so much? for 75000. I havent taken out a mortgage, so is it usually this high?

[natethenorsk]

Yes, that's how interest works. The higher the interest rate, the more interest you will pay over the 20 year note. The only way to pay only $75,000 is to get a 0% loan (if you find one let me know!) or to pay cash. Interest is how the lender makes it's money. 11.1% sounds high for an interest rate. If that's all you qualify for right now, and you can afford the payment, as your credit improves you will be able to refinance the property at a lower interest rate, thus paying less interest over the life of the loan.Let's say that in 5 years you refinance the property at an interest rate ot 8% on the remaining principal balance of $68,182 for 15 years so you are not extending beyond the original 20 years. Your payment would be about $652 a month or $7824 a year. You would pay about $49,000 in interest over the life of the new 15 year loan, plus the $39,000 in interest you paid over the first 5 years of the 20 year loan, or $88,000. Add the $75,000 principal and you have $163,000, which is an interest savings of about $26,600.Or, if you refinanced and still paid $9480 a year instead of $7824 a year to accelerate your loan principal payoff, you would pay off your loan a full 5 years earlier, owning the property outright in 15 years versus 20, and you would have only paid $70,000 in interest, or a total of $145,000 including the original $75,000.