The Real Cost of Buying Your Home
Buying a house is one of the biggest purchases you’ll ever make. So, no doubt you realize how important it is to shop around for the best mortgage rate. After all, a great rate helps keep your monthly payments manageable.
But here’s something many people don’t know: You could end up paying almost as much — or even more — in interest than you paid for the house itself! And that’s true even if you get a really great rate.
Let’s say you take out a $250,000 mortgage at 4% interest for 30 years. If you make all your payments on time, you’ll still pay more than $179,000 in interest over the life of the loan. Bump up that rate to just 5.5% … historically, that’s still a low rate … and suddenly, total interest owed soars.
Without even realizing, you’ve paid more than $511,000 for your home! Fortunately, there’s a way to shrink interest costs significantly. Paying down your mortgage faster can save you thousands. For example, adding as little as $50 to each monthly principal payment will save you almost $25,000 in total interest on that 5.5% loan.
And what if you choose a 15‐year term for your loan? You’ll save about $80,000! In fact, you’ll save even more since the rate on a 15‐year loan will be less than on a 30‐year mortgage. Want to know more? Speak to a financial advisor for more ways to accelerate your mortgage and your savings.