Mortgage Program Could Mean Big Savings in Interest Costs
By Tim Dalton
What if you could pay off your mortgage in approximately 10 years without increasing your monthly payment? What if that early payoff equated to saving tens of thousands of dollars in interest. Wouldn’t that provide you with more money for your business, your kid’s education, retirement and other long-term financial goals?
For decades the United States has been behind other countries when it comes to paying for their homes. Countries like Australia and Canada and some in Western Europe have used this innovative home loan program to pay for their homes more quickly and save substantial amounts of interest.
The current mortgage programs in the United States have not been overhauled since their inception during the Great Depression. A typical 30-year, $300,000 mortgage at 4 percent interest will cost the homeowner a total of $515,610 – including the $215,610 in interest. That is $7.10 in interest for every $10 borrowed.
Another statistic is for the first 12 or 13 years of a mortgage, the amount paid towards interest is greater than the amount paid towards principal. Think about that. All those payments being made and such a large percentage being wasted on interest payments while only slowly chipping away at the amount of principal owed.
Also by the 22nd or 23rd year you finally have reached the point that you’ve paid an equal amount in principal as in interest. Under this program, it’s just hard to get ahead financially.
So what if I told you there was a better way, that you can get your home paid off in approximately a third of the time of a traditional 30 year mortgage?
The program is essentially an all-in-one banking account where your mortgage and checking account all reside in one account. As you deposit money into your account, as you would your regular checking account, these deposits are applied towards the principal balance of your mortgage first before the amount of interest owed is calculated. Interest payments are calculated on a daily basis and the longer your deposits stay in your account before you start paying all your bills, the lower the amount of interest due.
As an example a household with a $250,000 mortgage and a monthly income of $9,000, with monthly bills of $7,650, would pay off their $250,000 mortgage in 10.3 years and save $148,830 in interest over a conventional 30-year mortgage at 5 percent interest. The savings are phenomenal.
A similar example would be the same $250,000 mortgage with a monthly household income of $6,500, and monthly bills of $5,525 would pay off their mortgage in 12.8 years and save $126,253 in interest over a 30-year mortgage at 5 percent interest. Again, far better financially than a traditional mortgage.
This program works for new loans and refinancing of existing mortgage loans. Of course, with any financial product there is always a disclaimer that there are certain criteria and qualifications that need to be met by a borrower, and not all borrowers will qualify for this program.
But if your goal is to pay off your home mortgage in far less time than a traditional mortgage while saving tens of thousands in interest, this is something you may want to check out. Just get in touch with me and I can get you in touch with the right people to explain in full detail how this program can benefit you and your financial future.
Tim Dalton is president of Integra Business Brokers and has more than 19 years of experience in the Augusta area assisting business buyers and sellers. Additional services include targeted business acquisitions, business valuations and financing assistance. Tim is a licensed Real Estate Broker in Georgia and South Carolina, NMLS#1468874. Contact him at 706.650.1100 or tdalton@integra brokers.com. Visit Integra’s website at www.integra brokers.com.