On a $150,000 mortgage at 7%, you will pay $209,262 in interest plus the $150,000 you borrowed over the life of the loan.
After paying you mortgage company for 10 years you will have made $119,754 in total payments. Of that amount, an astounding 81.4% will have been for the payment of interest. Your repayment of principal will have been only $22,278.
There are some ways that you can accelerate this:
The first one is by making payments to the principal every time you can. If your mortgage payment is $800.00 that does not mean you cannot pay more. Every payment you make in addition to the requested minimum will go towards the principal, if you request it when you make it.
Another way is to make your mortgage payment biweekly. You could do this by yourself, but it might not be easy to keep track of your payments. Here at Premier Consumer Credit, we can refer you to a service provider that can help you set up your mortgage loan on a biweekly program.
The advantages of a biweekly program on the case we mentioned before are the following:
The same 7%, 30 year mortgage paid on a biweekly basis results in $156,026 of interest paid over the life of the loan – a savings of $53,236, and your mortgage will be paid off six plus years sooner.
Any time you make principal payments, or you enroll in a biweekly program you are paying your mortgage loan faster, which build your equity faster, eliminates faster the need to pay mortgage insurance (if you were required to pay for it), and it lowers your effective interest rate.
Our certified credit counselors can give you specific advice on your situation. Please follow this link to request a free analysis.