It never ceases to amaze me how many people enjoy bragging about their mortgage rates, but fail to do anything productive with it. Allow me use the math to explain. Let’s say you have a $200 thousand mortgage with a rate of 4%. I’ll give you the benefit of using that low rate for the whole 25 years of your mortgage. Your payment is about $1055 a month, therefore, by the time you pay off your mortgage; you’ve paid almost $117 thousand in interest.
Okay, someone advised you to go biweekly accelerated. Absolutely fabulous. You’re down to about $100 thousand in interest, and mortgage free 3 years sooner.
Why not think the other way? Why not pay as if you didn’t get a low rate? The same mortgage at 6% would have a payment of about $1288 a month. So, why not pay the $1288? Not only will you be mortgage free in 18 years instead of 25, you’ll save about $35 thousand in interest.
Whenever you buy something “on sale”, you’re saving money by spending less than the regular price. So, why aren’t you saving money when your mortgage is on sale?
