Thursday, August 23, 2018 / by Andy Mandel
Have no fear, homebuyers: there is a way you can shed years off of the life of your loan.
When I’m dealing with buyers, a lot of them will ask me whether they should get a 15-year mortgage or a 30-year mortgage.
I always try to recommend the 30-year mortgage, and here’s why: Your payments with a 30-year mortgage will be slightly lower each month, which allows you some flexibility in times of hardship.
However, here’s a useful trick to cut some years off of the life of your loan: if you add one-twelfth of your monthly payment onto your actual payment every single month, you can shave eight years off the total life of your loan.
For example, if your monthly mortgage payment is $2,500, and you pay an extra $200 per month on top of that, you’ll turn your 30-year loan into a 22-year loan and save a ton of money on interest.
If you’re interested in buying or selling a home and would like to sit down and put together a financial plan moving forward, feel free to reach out to us and let us know how we can help.