So you snagged that promotion at a work you’ve been gunning for over the last year. Congratulations! You probably got a nice bump in salary with that promotion and are already thinking about the ways you can spend that money.
Not so fast! Before you start planning your dream vacation and test driving your dream car, let’s talk about a simple way you could save a boat load of money and be mortgage free faster than you thought possible.
Save Thousands In Mortgage Interest with This Savvy Finacial Strategy
In the world of personal finance, small tweaks can add up to big dollars. One of the biggest financial assets people have is their home and one of the largest liabilities is a mortgage on that home. You’re probably in the same situation.
But what if you could cut 5 years off your mortgage and only increase your monthly mortgage payment by $185 while saving over $68,000 in interest? Would you do it?
You could get a really nice car by saving $68,000. The Lotus Evora comes in around $68,750. You’ve got that!
Kidding aside, here’s how the math works out.
Let’s assume you have good credit with a FICO at 740+ and that you took out a $400,000, 30-yr mortgage back in 2011 at a 4% interest rate.
Your principal and interest payment is in the ballpark of $1,909 per month. If you were to stay in the home for the full 30 years, and kept your current mortgage, you would pay the bank a total of $287,478 in interest.
That’s a lot of Lotus’s, Lotuses... Loti?
Anyway… It’s now 2016 and you just got that sweet promotion so you have more money coming in every month. At this point your mortgage balance is around $361,086, you have 25 more years to go and about $209,903 in interest you still need to pay the bank.
But you’re savvy. So you decide to refinance to a 20 year mortgage at the current rate of 3.5%.
Your principal and interest payment increases, just slightly, to $2,094. The great news is that you only owe $141,510 in interest to the bank. You cut off 5 years of mortgage payments and you saved over $68,000 in interest!
If you’re really serious about saving money and being mortgage free you could consider going to a 15-year mortgage term. To preserve a little mystery, we’ll let you get your own 15-year mortgage quote to see how much savings this could earn you.
At this point you should be ready to invest 30-seconds to get a free rate quote and start picking colors for your new Lotus. We like green :)
Lotus Image 1