The Cost of Borrowing Money
Today we’re going to talk about how to quickly look at your cost of borrowing money. The cost of borrowing money is your finance charges or interest that you pay monthly. You can look it up on your mortgage statement each month or for a quick easy calculation, just multiply your current balance by your rate and divide it by 12 to get a quick ballpark of how much you’re paying in interest that month. For example, if you have a $400,000 mortgage at 3.25% rate, your interest that month would be approximately $1,083. That’s your cost of borrowing that $400,000. Now, let’s say you could drop your rate, conservatively down to 2.625%… that same $400,000 loan would now only cost you $875 in your first month! That saves you over $200 in interest. Now, you have a lot more cash that you can use for investment purposes, to pay off higher interest credit cards, put towards savings or use it to pay the house off even faster and shorten your term. The choice is yours. Don’t miss out. Speak with one of our mortgage professionals and at least run the numbers!