They DO!
And to illustrate the impact
interest rates can have on your overall financial picture, I’ve presented a
sample table below showing the interest you pay over the term of a 30 year,
$150,000 loan at 8%, 7% and 6%.
And here’s the clincher: Just ONE percentage point on a
$150,000 loan can cost you almost $37,000 over the term of the loan! TWO percentage points will cost you over
$72,000!!
Your banker might tell you his “slightly higher rate” is only a matter of $103 a month in
payment. But YOU should know
better! Take a look at the table below:
Loan
Amount
$150,000
$150,000
$150,000
|
Interest
Rate
8%
7%
6%
|
Monthly
Pmt.
$1,101
$998
$899
|
Interest
Paid
$246,233
$209,263
$173,757
|
Savings
--
$36,970
$72,476
|
That’s money taken out of your pocket if you don’t look for
good rates!
And if you think interest rate has an impact on your overall
financial picture, take a look at what modifying the TERM of your loan can do.
Here’s another example of a $150,000 loan at 7% interest. But this time, we examine the total interest
paid when you select a 30-year vs. a 15-year vs. a 10-year amortization:
Term
30
Year
15
Year
10
Year
|
Interest
Rate
7%
7%
7%
|
Monthly
Pmt.
$998
$1,348
$1,742
|
Interest
Paid
$209,280
$92,640
$59,040
|
Savings
--
$116,640
$150,240
|
The “bottom line?”
Estimate the maximum amount of payment you can afford, and adjust TERM
and INTEREST RATE of your loan to minimize the amount of total interest
you’ll pay.
If you are not sure about buying a home and are scared of losing money or getting caught in a bad deal, empower yourself with information!
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