Save a Fortune On Your Mortgage

You’ve heard the expression, “Pennywise and pound foolish?” A good example is when someone is more concerned about the interest they’re getting on their savings account than the interest they’re paying on their mortgage.

Of course, it’s great to shop around for the best interest rates on savings. The point is that there’s a greater return on your time investment if you pay attention to how much interest you have to pay on your mortgage.

Take a look at the amount of interest you’ll pay over the life of a 30-year fixed rate mortgage— and it should be all the incentive you need to pay it off as fast as possible.

Let’s say you take out a $375,000, 30-year fixed rate mortgage at 7.3%. That’s the median sales price for a home these days, and an average interest rate.

At the end of that term, you’ll have paid just over $550,000 in interest, making the true cost of the home closer to $925,000. With today’s higher interest rates, it’s more important than ever to get your mortgage paid off as quickly as possible.

Now let’s say you take out that 30-year mortgage, but you decide to pay an extra $300 a month on the principal. You might have to make sacrifices to do that, but it will pay off tremendously.

If you pay that extra $300 each month, you’ll pay off the 30-year loan* *8 years and 3 months faster, saving you $176,000 in interest.

So you see, paying off more of the principal each month is huge and it really needs to be a priority in your financial decision making. There are four steps to getting there.

1. Get on a spending plan, not just because it’s a good idea and everyone should have one, which is true. You need a budget because you can’t start the process of accelerating your mortgage payments without one. Setting up your spending plan is now easier than ever with the new FaithFi 4.0 app. It uses the envelope system to make budgeting easy and it’ll track your spending and reveal things you can cut to free up more cash. For example, cut back on your streaming services, limit eating out, put a moratorium on new clothes purchases, even if it’s just for a month or two. If you need more incentive to tighten the belt, consider that saving just $25 a month and putting it on your mortgage will net you $22,000 in reduced interest payments in the example we gave above. 2. Determine just how much of that extra cash you can apply to your mortgage. You can even make it a budget category all by itself. Anything extra you put on your mortgage now will be worth a lot more down the road, so make that number as big as you can. 3. Use money that comes from outside of your budget, as with a bonus or tax refund. Put that unexpected cash on your mortgage principal, as well as the surplus money you’ve identified in your budget. 4. If you haven’t set up an online account with your lender, do that now. Most lender websites make it easy to apply extra payments to the principal just by clicking a button or two.

While you’re logged in to your mortgage account, you’ll be able to see the running balance of your principal. Keep track of it. Watch it go down as you make extra payments. It will help you stay motivated. As you make progress, celebrate along the way— within budget, of course!

The sooner you start, the more money you’ll save that can be put to better uses. Proverbs 21:5 says, “Slow and steady plodding brings prosperity … “ So start plodding steadily toward your early mortgage payoff.

While you’re doing all of this, wouldn’t it be great to know that you’re actually helping to make the world a better place, and expanding the Kingdom, just by paying your mortgage?

You can do that with Movement Mortgage, an underwriter of the Faith and Finance program. Movement is a decidedly Christian* *mortgage company that was founded amid the housing crisis of 2008 to help Christian homebuyers and to have a positive impact in communities in the U.S. and around the world. Besides offering competitive rates, Movement gives its customers a chance to participate in a movement of change. In a little over 15 years, the company has donated $377 million to projects helping local communities. Movement has 775 locations nationwide and can service loans in all 50 states. There’s bound to be one near you. You can also listen to the related podcast on this topic.