I admit the headline is a bit catchy but the amazing thing is that it’s absolutely true. I was literally amazed at how easy it was. I was even more astounded to discover that had I not been aware and acted promptly no one would have bothered telling me anything.
Yesterday, by leaving work for one hour, I managed to save 3,000$ in interest payments and a year and a half (!) of mortgage payments.
How was this miracle performed? Simply by being aware to falling interest levels and by snooping around at current interest rates offered on mortgages. The loan officer knew exactly what I came for the minute I sat down and was suddenly very eager to match and best any offer I had received elsewhere.
A simple discount of 0.5% on my mortgage rate was enough to save me 3,000$ on interest payments and a whole year and half of payments while leaving my monthly payments the same as it was.
The source of this financial miracle is obviously a combination of two powerful financial tools:
1. Compound interest
2. Long term
There have been so many words written on these two but nothing compares to watching them do their magic for you.
Still a troubling thought crosses my mind. What would have happened had I not been aware of the economy and of current financial developments? What would have happened had I not been financially literate and had the understanding and opportunity to refinance my mortgage as I just had?
The obvious answer is that many of us are probably throwing money away daily. I’m not a “frugal” person, as I often bother to mention. For me the everyday effort of saving pennies is just not worth it. I strongly believe saving real money lies elsewhere. It lies in loans, interest rates and smart saving and investing. It’s how we buy our homes, how we save for mid and long term and how we manage our home economics that matters. That is also why “The Personal Financier” is more about these subject matters.
With interest rates dropping sharply I believe every one of us who carries a mortgage should very diligently look into the possibility of refinancing it and saving big.
The thumb rules regarding mortgage refinancing are usually lower interest rates compared to the costs of originating a new mortgage. I’m not very proficient when it comes to mortgages and I suggest, as always, you consult with a mortgage consultant. Bankrate.com offers this calculator.current interest rates, financial developments, half, headline, home economics, interest levels, Miracle, mortgage, mortgage payments, refinancing