Webs’ Random Ideas

This one is more for the younger generations that read this blog, but the tips are useful nonetheless…

From a financial blog comes this article with 15 tips to saving money:

#4 Make extra mortgage payments.
By accelerating your mortgage payments, perhaps by making an extra payment towards your mortgage, you’re contributing to your equity and thus, your pocketbook. Just another way to help pay down a good debt obligation. Here’s a quick way to see how many years you’ve cut off from your mortgage by making extra principal payments.

I especially like the link to the extra principle calculator. This website creates an easy to understand image of how paying more into your mortgage reduces your total interest payed and reduces the time it takes you to pay off the home.

I like the tip above and would like to add to it by saying, for those of you close to getting a house like me, save up as much money as you can before you buy and at least put 5% down. The more the the merrier.

An example of a real life scenario is the picture below…

Above we see the results of me using the amortization table I have linked below. The numbers I put in on the column on the left reflect what one bank told my fiance and I. The top two columns represent my scenario if I have no money down for the house. As you can see, interest paid is much higher and the interest rate is a lot higher. The top two columns represent a first time buyer loan that locks in 6.95% for 30 years, and the bank puts down 3.5% for you.

The last two columns represent just 5% down on the house. And part of another first time buyer loan at the bank you get a lower interest rate. My, what a difference $7500 makes! Well, and we have a lower interest rate… but the point still stands. Going in for a house your first time with no money down is not good financial planning.

Which is why anyone thinking about getting a mortgage should check out an Amortization Table! Here is a free Amortization Table I have on my server…