Monday, January 12, 2009

Want A Fixed Rate Mortgage That Will Save You Thousands On Mortgage Interest?

How would you like to discover a little known fixed rate mortgage program that will not only save you thousands of dollars, but tens of thousands of dollars on a mortgage loan? Read on…….

I am not referring to a 15 year mortgage, nor am I talking about a bi-weekly or some type of mortgage reduction program. Yes if you can afford the payments the come with a 15 year loan, the by all means go for it. It will not only get you out of mortgage debt faster, but will save you thousands of dollars in interest charges and help you accumulate wealth sooner, as you enjoy the benefits of you home appreciating in value.

Fixed rate mortgages have always been my recommendation to first time home buyers, because they are less risky than adjustable rate mortgages. One of the main causes of foreclosure is an adjustable rate mortgage, which has adjusted on a home owner to the point where the mortgage payment is no longer affordable. The most common fixed rate mortgage is the 15 year or 30 year fixed rate mortgage loan. But this doesn't mean there aren't other options, did you know that you can also get a 20 or even a 25 year loan. The loan program I want to focus on today is the 25 year mortgage.

The first reason is the 25 year loan comes with the same interest rate as a 30 year loan, as well as the payment difference is minimal which will allow you similar payment relief as the 30 year loan, but saving you thousands in interest charges. Illustration below for a $200,000 mortgage loan:

Many of my competitors usually don't mention this 25-year option because of two reasons first, they usually don't know this loan option exist and secondly, they lose the interest payments over the life of the loan.

For example, on a $200,000, the rate is the same whether you go with a 25 year or 30 year mortgage loan and the payment would be about $86 higher per month with the 25 year loan, but over the life of the loan, you will save over $49,000. Now I am sure you could find a few things to do with an extra $49,000.

The $86 per month is less than one dinner out, per month for a family of 4! Does that type of mortgage interest you?
Even if you plan on staying in the home short term, for let say only 5 years, you will save about $1000 in interest charges but because of the additional $86 per month, you would have paid well over $6000 towards your principal balance when calculated over the 5 year period.

This is the reason why it is important to work with a mortgage expert that has your best interest in mind, especially if you're a first time home buyer. And experience mortgage expert can guide you through the entire loan process, which will in turn save you a lot of headaches and money. And since this is such a large transaction we are not talking about chump change, we are talking about thousands of dollars that could otherwise be used to build wealth.

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