How To Save Thousands Of Dollars In Interest On Your Mortgage in 2018
One of the most common loans you can get to buy a home in Charleston is a 30-year fixed rate mortgage. If the thought of paying for your home over the course of 30-years seems daunting, here are some easy ways to shorten that term which will actually end up saving you money over the life of your loan.
Any additional payments to the principal amount (the original sum of money borrowed in a loan), helps to cut down the amount of interest that you will pay over the life of your loan and can also help to shave years off the loan as well.
When you make ‘extra’ payments toward your loan, the key is to let your lender/bank know that you want the extra funds to go toward your principal balance as they will not automatically do this for you.
You don’t have to double your mortgage payment to make a big difference either!
If you have a 30-year mortgage on a median-priced home ($250,000) with a 5% interest rate, you’ll be responsible for a $1,342.05 monthly principal and interest payment. Over the course of the loan, if you pay your exact monthly payment, you will have paid $233,133.89 in interest alone!
Paying a Little Extra Can Pay Off Big
1. Pay an additional 1/12th of your mortgage payment every month
Benefit: In the example above, adding $111.84 to your monthly mortgage payment might not seem like a lot, but each year you will have paid one extra month’s worth of payments which will shorten the term of your loan by 4 years and 8 months, all while saving you $42,000 in interest!
2. Pay an additional $50 per month towards your mortgage
Benefit: Fifty dollars might not seem like enough to make a difference on the term of your loan, but that small amount will save you over $21,000 in interest and will take over 2 years off the end of your loan. Twenty-eight years from now, you’ll be happy to pay off your loan that much sooner!
3. Make one-time lump sum payments when you can
Benefit: If you find yourself with a little extra money after a yearly bonus, a tax return, or from investment dividends, paying that money towards the principal can cut your costs. This option, however, is less predictable than the extra monthly payments.
If you have higher interest debts, like credit cards, consider using any extra funds you have to pay those debts down before applying that money towards your mortgage. Also, if you do not plan on staying in your home for more than 10 years, paying extra toward your mortgage might not make sense.
If you’re wondering what strategies would work best for you to shorten the term of your Charleston SC loan reach out to the experts at ChuckTown Homes Real Estate- we can answer your questions or connect you with someone who can.
We have trusted lenders in Charleston SC with the heart of a teacher: Best Charleston Lenders!
BY THE KCM CREW
2 Concord Street
MLS# 18028075 - Residential
Enjoy iconic views and ultimate luxury at this one-of-a-kind property located in downtown Charleston. This is the only single-family residence downtown offering a 240-foot private boat dock made of fixed concrete with 100-foot floater and boat lift with 20,000 lb. capacity, available power of 480-volt 3 phase, 100-amp, 120 single phase in the pedestal, and lighting in the boat lift. Merging history with modern amenities, the original structure was once a degaussing station for the Navy. After a complete renovation in 2010, the property now offers a main house, guest house and dock. The 4,689 square foot main residence sits atop concrete pilings uniquely positioned above the water offering superb views of Charleston Harbor, Fort Sumter, The Yorktown, Ravenel Bridge and the historic Charleston Peninsula. A formal entryway and grand staircase are the focal points upon entering the estate, while a gourmet kitchen, formal dining room, living room, climate-controlled wine room, library and powder room complete the first floor. The library, with a gas log fireplace and hand detailed cypress paneling, provides the ultimate refuge for relaxation and comfort. The home's second level encompasses the master suite and three additional bedrooms with en-suite baths, each room providing breathtaking waterfront views. Completing the main home, the third level entertaining room and bar area provide the ideal setting for grand gatherings or sailboat watching from the adjoining terrace. The guest residence above the three-car garage is a spacious 1,234 square feet featuring antique chestnut floors throughout. The floor plan includes an open kitchen, living and dining area as well as two bedrooms with en-suite baths, laundry facility and private terrace. The grounds total 2.7 acres with landscaping using regional/local materials and storm water managed on site with tanks supply all water for irrigation and landscaping. This is the first project in the historic district to use solar roof panels. Double sided solar panels are integrated into the railing to take advantage of ambient and reflected light from the white tabby walkway and water below. The main house was awarded LEED Gold and the guest house LEED Platinum designation. This masterfully designed property is truly incomparable.