Real Estate Savings Strategies: Interest Rates

Meridian home $204,500 available.

Fabulous ways to save BIG $$$ on your Home Mortgage!

The number one way to save money on your home mortgage is having a good interest rate. No surprise here, but have you actually done the math?

Consider this: If you have a home with a $200,000 mortgage at 6% on a 30 year term by the time you have that loan paid off, assuming you don’t pay extra principle down, you will end up paying a total of $431,676. That is an additional $231,676 in interest. {Yikes}

Now consider this: Say you take that same $200,000 mortgage at today’s rate of 4%. You end up paying a total of $343,738. That is an additional $143,738 in interest.

So by taking advantage of today’s lower interest rates you could save yourself BIG $$$! $87,893 in this scenario.

Think of what you could do with that extra money. It will probably cost around $5,000 in closing costs to refinance, but that is still $82,893! Not bad for a couple hours of work.

Also if you are on the fence about buying a new home consider that the interest rates today are unheard of and will most likely not last long. Now may be the time to buy. It could save you some serious $$cash$$.

For more information contact:
Mark Knight
markknight@boisepremier.com
(208) 577-1487
Fabulous Idaho Real Estate

Comments

  • Kiki & Ryan

    Yeah, my parents bought during the prime time of interest rates, so during Christmas, my husband and I are going to try to get them to refinance to the lower rate. They always say that if its more than 1% of a difference that its a good idea to refinance, but if its less than that, that you might want to hold off.

  • Yes. You are exactly right Kiki and Ryan 1% and you should plan on being their at least 3-4 more years. Because of the associated closing costs.

  • Joan Blurton

    Also figure in where you are in the life of the mortgage.  If you’ve already been paying for years, you’ve possibly paid the majority of interest (in the beginning of the life of the mortgage) already, and refinancing would put you back at the start of a new mortgage with most of your payment going to interest rather than principal.

    • True, You may not want to refinance for an additional 30 years if you are well into that term. The reason you pay more interest in the beginning is because you owe more principle, but you are paying that same interest rate on whatever principle balance you have, if it is year one or year 15. So if you refi at year 15 you would probably want to get a 15 year term for only what  you still owe and you will see substantial savings over staying at the higher rate and carrying out your original 30 year term. Does that make sence?

  • Jeanna

    Mark, I have a question for you. I have two re-fi mortgage options. option A re-fi at 4.1 with lower loan amout of 196,500 or option B re-fi at 3.875 with a higher 200,000 due to additional fees. Both with similar payments . which is the smarter re-fi over 30years?

    • Jeanna

      Thank you Mark :0) One more question for you. We are moving from a 5.375 interest rate. How do you calculate interest rate savings over 30 years?

      • The easiest way is to go to my site at fabulousidahorealestate.com and on the home page on the bottom right hand corner is a mortgage calculator. Just click on that and you can punch in any interest rate you would like and it will tell you how the payments will differ.

  • Jeanna, If you select the “15 vs 30 Year Mortgage ” it will be the easiest feature.

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