How you can beat back the banks and save money on your mortgage.
Does it feel like the banks are gouging your savings away with their mortgage requirements? The truth is that banks only lend you that money to make a profit off your interest. Fortunately, there are some easy tricks you can use to beat the banks at their own game and save yourself a ton of money in the process. For all the examples I’m about to show, we’ll assume you have a 30-year, fixed-rate, $475,000 mortgage at a 7% interest rate. Here are three mortgage hacks you need to know:
- Make an extra payment every year. In this example, your monthly payment is $3,160. The total interest paid over the life of the loan, if you go all 30 years, is $662,000. If you make just one extra payment every year, it takes the life of your loan down to 24 years. You cut six years off of it, and you save $156,000 with that one extra payment.
- Make bi-monthly payments. Instead of paying one large amount every month, you’ll pay half that amount every two weeks. Since most months have more than 28 days, you’ll actually pay your mortgage down faster this way and save tons of money on interest. The total life of your mortgage will go down to 24 years too.
- Round up your payment. Instead of paying $3,160 every month, you could pay $3,200. It seems like a small change, but it will save you $32,483 over the course of the loan.
If you have questions, we have loan officers on staff who can help you through the process. We’ve done this for almost two decades now, and all you have to do is call or email us. Reach out to us. We’ll see you at the closing table!