Super Saver 25 Mortgage
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Would you like to pay-off your mortgage more quickly? Of course you would! Who wouldn’t? A shorter mortgage term will typically offer a lower interest rate and can save you a bundle in interest over the life of the loan. It can be a perfect solution for some and a daunting task for others. The challenge is being able to budget for that more aggressive 15 or 20yr payment. Most folks simply resign themselves to taking the 30yr route and watching that principal balance go down slowly but surely with a focus on slowly.
There is, however, a place in between that can still yield big savings but without the big monthly payment called the Super Saver 25.
The Super Saver 25 will shave 5yrs off the life of your loan equaling thousands of dollars in savings while keeping a payment you can afford!
Here’s a quick example:
Bob and Carol have a loan balance of $275,000 on their home. If they were to refinance today with a new 30yr mortgage, their principal and interest payment (P&I) would be $1353/mo at a rate of 4.25%. If paid to term (ie…360 payments later,) the total cost of loan would be $487,022. Although they would like to pay their home off more quickly, the 15 or 20yr terms were simply too aggressive for their comfort level. As an alternative, Bob and Carol opted for the Super Saver 25. By shifting to a 25yr term, they were able to save just over $40,000 in interest over the life of the loan for just $137/mo in additional payment.
So, to quickly recap, if you can afford and feel comfortable committing to a 15 or 20yr payment, it is a wonderful way to maximize your savings and really beat down a loan balance. However, if you aren’t willing or able to commit to the more aggressive payment schedule but would still like to see a bit more progress on your loan balance each month, the Super Saver 25 might be a great fit. You can enjoy thousands of dollars in savings for only a slight lift in your monthly payment. Also, don’t forgot, you can certainly apply MORE principal and pay the balance down even faster if your financial situation changes and we can always look to review your scenario and determine if a No Closing Cost refi to a shorter term might be beneficial. While you can never truly have your cake and eat it too, the Super Saver 25 will at least give you a bigger slice of it without the bigger payment!
|Loan Term||30 Yr||25 Yr|
|Increase in Payment/Month||-||$137|
|Total Cost of Loan||$487,022||$446,934|
|Savings Over Life of Loan||-||$40,088|