The Real Cost of Buying Your Home

Buying a home is exciting – realizing how much you pay in interest payments isn’t. Learn how paying your mortgage faster can save you money in the long run.


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.