When a borrower gets a loan, the lender is taking a risk in order to make money. We can all agree that someone who gives a loan deserves to be rewarded to some extent. We’ve all dealt with a variety of loans. Mortgages, credit cards, student loans, the list goes on! Loans are a good thing, because they help us do things that we’d otherwise have to save for years and years to purchase. When it comes to college or getting a home, these are situations where often times we just don’t have the time to wait to accumulate that significant amount of money. With mortgages, everything seems great at first. The banks will offer a loan with a low interest rate. It all sounds good, but when you break down the numbers, banks are getting much more than their fair share.
Principal vs. Interest
Did you know that over time homeowners will pay over 80% of the principal on their mortgage, just in interest? Essentially, the banks want you to pay them back what you owed them, plus 80%! It may not seem this way when the terms are drawn up, but it’s true! This concept is explained in a simple, visual way in this informative video we developed. What borrowers need to be paying down is principal, not interest!
Paying Down Debt and Interest Quickly
In recent years, we’ve all seen the stories about more than half of America living paycheck to paycheck. In many of these cases, loans or debt are factors in this. You would think that it makes sense to receive a paycheck, pay as much down on your cards as possible, make your mortgage payment, etc… Sure this helps, and it’s certainly better than just making a minimum payment, but a problem remains. The problem is that we are left with no financial cushion.
Left With No Savings or Financial Cushion
We’ve all been there, receiving a paycheck and knowing that it’s all going to be gone before we even leave the house. Of course, as long as there is a roof over our head and we have food on the table, we should be happy, but our natural human instincts tell us that we want more! And as hard as we work, we deserve more. Instead of paying a lot of interest, what if you could make short-term loans to yourself, make your money work for you and save a lot of money on interest? It may sound too good to be true, but it is possible. There are hundreds, sometimes even thousands of ways to pay down loans, and we’ve developed an algorithm that directs you to the optimal way of repayment. We touched upon some of the principles that help you attack your principal, rather than interest in our last blog post. To take things to another level, it’s also possible throughout the repayment process to save money and build a cushion. You don’t have to live in financial stress every day.
How Much Is The Bank Taking From You?
Take a step in the right direction, and see how much the bank is taking from you over the period of a 30 year mortgage through our simple form. Afterwards, we encourage you to learn more about mySmartPay Wealth Solution. Our goal is to help you put years of payments back in your pockets. Thank you for reading, and we look forward to discussing a solution for your loans.