2 Choices that Saved Thousands on the Mortgage

You are ready to buy a house and you don’t want to be a slave to the mortgage until you die. It doesn’t matter if this is your first or last house, you can start planning to own it out right from the day you start browsing real estate sights in your area.

Here are two tricks that will save you thousands of dollars in the long run and they will help you pay off your home sooner.

  1. Commit to a 15 years, fixed rate mortgage
  2. Request that your loan accept bi-weekly payments

The two things will naturally shave 15 years off the average mortgage in America.

Trick #1: Commit to 15 year, fixed rate mortgage

The average homeowner has a 30 year, fixed rate mortgage. While it offers the benefit of having a lower payment, it ends up costing the homeowner thousands of dollars in interest. Let’s look at an example to really understand how much money is being left on the table. We can use the numbers from my home buying experience  for the example.

Example: Mortgage is equal to $122,290 and the rate is 3%.  I had the choice to sign up for 15 or 30 years.

Mortgage Term Monthly Payment Estimated Interest
30 Years $515.85 $63,318.58
15 Years $844.51 $29,722.31
Total Savings   $33,596.27

Who knew one little decision could be worth $33,596.27?!?!

Trick #2: Make bi-weekly Payments

Making bi-weekly payments is an option that many, but not all mortgage lenders offer. Therefore you must request that your loan officer select a loan that permits bi-weekly payments. You will make a total of 13 payments each year instead of 12. This trick doesn’t save as much as the first trick but it definitely moves the needle. We will continue using the example from above to see how much one can save by paying bi-weekly instead of monthly.

Mortgage Term Interest Paid
Monthly Payment 29,722.31
Bi-Weekly Payment 26,611.86
Total Savings 3,110.45

Here you have it, this choice saves an additional $3,110.45.


All in all these two choices saved $36,706 in interest. When I sit back and think about it’s an easy choice when this much money is at stake.

I highly encourage you to run the calculations on any home you are considering to buy. It will be time and energy well spent.

For calculations I used the Vertex42 Free Home Mortgage Calculator (excel).



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