The power of a low mortgage rate

Okay, Matt the mortgage guy here. Just a quick video to talk about the power of a low interest rate, the magic of math, how it relates to mortgages. So in order to save time, I wrote a bunch of numbers up here. 360k loan amount. Just wanted to compare and just mess around with amortization schedules at a four quarter interest rate and a 2.99% interest rate. Now, everybody's different. Their goals are different. But what I try to look at is not only what your monthly payment is going to be, but over time, how you're going to pay things off faster at a lower interest rate, how much total interest you're going to save. Now, here's one of the things that I try to be super honest and straightforward with people about. Comparing the total amount of interest you pay on the life of the loan, current versus new, is really a silly calculation because 99% of folks aren't staying in a loan for 30 years. So if we look at the first five years, the first 10 years, when you either sell, refinance, move to a different house, whatever the case may be, that's a better... It's just a better thing to analyze than, hey, over 30 years, you're going to save 90,000 interest. Well, 99% of the time, you're not going to be in it for 30 years. So it's a silly thing to look at. It creates a really big numbers of, wow, but it's really, it's not that useful in my humble opinion. So you look at this payment, principal and interest at fourth order, 1771 versus 1517 at the 2.999. Now it's $154 less per month, which is great. But to some people, it's like, that doesn't really excite them. And when we're talking about refinance, everyone's needs are different. $154 a month might not really, hey, I don't want to incur $3,500 in costs or whatever the cost of refinance are going to be to save $150 a month. It's just, I don't know, for a lot of people, it just doesn't get them excited. So what some people do is, oh my gosh, total interest. Look at this. You're gonna pay 278,000 in your current loan. You're only gonna pay 186 in this new loan. That is, what is that? 92,000 over life alone. Like I said, life alone, not a really good thing to look at. You're not staying in this loan for life alone, more times than not. Cool little calculation I included here was if you took this 2.99% interest rate and said, hey, I'm going to pay the same that I was paying it forward of order, this plus $154 a month. I'm going to throw it at the principal. A really good idea for folks who don't need to lower their payment, but when they do, they take that savings. They go, you know what? I'm going to pay it towards principal. And what's going to happen is then their total interest on this new loan is $157. Now they're $221,000 ahead this loan versus that loan. Again, not necessarily going to be in it that long. So I like to look at it as people are staying in their homes longer nowadays and then their mortgage is longer, probably because rates are lower. But whatever the case, let's look at a 10 year. And let's say starting at 360, four and a quarter, what's your balance going to look like in 10 years? Now, 286 is what it's going to look like at four and a quarter based on just that amortization schedule. You're going to be $13,000 ahead at the 2.999, because it's paying down faster. It's got a lower interest rate. So more is going towards principal and less towards interest on this loan versus that loan. But here's the cool part. Take that $154 a month, apply it directly to principal every single month. Then at that 10 year mark, you're at $250K. So if you have these loans side by side and you said, well, this isn't our forever home, staying here forever, but we're probably going to be here for 10 years until the kids get out of high school. And then maybe we'll move to a condo downtown or whatever the case may be. Keep your payment the same, save 154 a month on interest and throw that 154 at principal. Now you owe 250 after 10 years versus 286, an extra $36,000 in your pocket. That's going to go towards the next home. We're going to go in wherever it's going to be, you're $36,000 ahead. Now that's the type of stuff that I think is a reasonable analysis and something that people should take into consideration when they're thinking, I'm going to stay in this loan for 10 years, but I don't know, you know, maybe it's, maybe it's not even 154, maybe it's 127 a month, you know, and Hey, I don't want to incur, you know, an appraisal's not needed. You told me that and fees are relatively low, but still $3,100 between the title company and lender. I don't know if that pencil's, if that $3,100 today got you 36,000 in your pocket when you sold, it's probably a worthwhile endeavor. So any questions at all regarding mortgage in general, if you want me to geek out on numbers, trust me, I'm waiting for your call to do that. So give me an holler. Talk to you soon.