Did you know that over the life of your mortgage, you could pay hundreds of thousands of dollars just toward the interest on the loan? “Not on my house,” we hear you thinking.
Well, let’s take a look.
In Buncombe County, the average sales price in 2018 was $293,950. If you factor in a 5% annual interest rate over a 30-year term, that comes to an additional $274,125.38 in interest. That’s almost as much as the purchase price of the home!
Want to make sure you don’t pay nearly double for you home? Here are two easy ways to save big money on your mortgage over time.
1. Shop/Buy Down Your Interest Rate
The easiest way save money on a loan is to pay less interest. That’s why it pays to shop around for your home loan. We recommend reaching out to local lenders who will sit down with you and explain how to get the best loan. For instance, spending a few months improving your credit score could make a big difference in the interest rate you’re offered.
If you have a good amount of cash saved up, have them show you how you could benefit from “buying points.” Mortgage points are paid directly to your lender in exchange for a lower interest rate. Depending on your finances and the terms of the loan, you may benefit more from buying points than putting your entire savings toward the down payment. Or you may benefit from a combination of the two.
2. Pay Half Your Bill, Twice as Often
Once you’re in your home, there are still ways to save. By paying more toward the principal of the loan, you’ll cut the life of the loan—and the amount you pay in interest—down significantly. For instance, paying an extra $100 each month can cut your loan down by five years and cut your interest paid by almost 20%. That’s nearly $55,000 off the interest paid in the example at the top of this post!
Are you paid every two weeks? Try paying “half” your bill every time you get a paycheck. If your mortgage is $1,400, pay $700 every two weeks. Once you get used to it, it’s easy to budget for—it’s the same amount off the top of your paycheck every time. Plus, by the end of the year, you’ll have made 26 “half payments,” or 13 full mortgage payments. That’s a whole extra month of mortgage payments you paid without even thinking about it!
Are You Ready to Save Big Money on Your Mortgage?
At Beverly-Hanks, we strive to make financing real estate easy and enjoyable. That is why we are staffed with local financing professionals dedicated to prompt, personal service. You will find we offer a broad menu of financing options, very competitive rates, and customer service that is second to none. Learn more at beverly-hanks.com/our-services/mortgage-title-services.
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Beverly-Hanks Mortgage Services (NMLS# 42020)
For more information on our many financing services, call one of our professional mortgage loan officers today: (866) 858-2257.