Reduce Your Monthly Mortgage Payments by Increasing Your Down Payment

Monday, May 12 at 10:30 AM
Category: Personal Finance

The size of your mortgage payment is determined by two factors – the interest rate and how much you borrow. There is little you can do to reduce interest rate. However, you can reduce your mortgage payment by having a larger down payment. Use a savings plan to build your down payment.

Here is a little chart showing the affect of having a larger down payment for a home costing $250,000.

(Assumes an interest rate of 3.5 percent and a 30 year amortization.)

You may already have some savings, but establishing a disciplined savings habit can help you increase those savings, increase your down payment and reduce your monthly mortgage payment.

Here are some examples of how little you need to save monthly to add to those savings.

(Assumes a 3 percent earnings rate.)

Start Saving Today
There is no easier way to save than with an automatic savings plan. Set up an automatic transfer of funds from your checking account to your savings account, money market, mutual fund or other accounts. You might also check with your employer. Companies will often deduct savings from paychecks if asked.

Conclusion
With some disciplined saving you can build a larger down payment which will trim down your monthly  mortgage payment.

Links marked with * go to a third-party site not operated or endorsed by Arvest Bank, an FDIC-insured institution.

Tags: Financial Education, Home Loans, Mortgage
Shawn karnes on 5/14/2014 at 2:32 PM
Great article!

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