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Reduce Your Monthly Mortgage Payments By Increasing Your Down Payment

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.

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

Cost of the home Down payment Mortgage Amount Monthly payment
$250,000 $25,000 $225,000 $1,010.35
$250,000 $50,000 $200,000 $898.09
$250,000 $65,000 $185,000 $830.73
$250,000 $75,000 $175,000 $785.83
$250,000 $100,000 $150,000 $673.57

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

 

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

Here are some examples of how much you need to save monthly to add to your savings.

Increase your savings by Over 6 months Over 12 months Over 18 months Over 24 months Over 30 months Over 36 months
$10,000 $1,656 $822 $544 $405 $321 $266
$15,000 $2,484 $1,233 $816 $607 $482 $399
$25,000 $4,141 $2,055 $1,360 $1,012 $804 $665
$35,000 $5,797 $2,876 $1,903 $1,417 $1,125 $930
$50,000 $8,281 $4,110 $2,719 $2,024 $1,607 $1,329

(Assumes a 3% earnings rate.)

Start Your Automatic Savings Today
There is no easier way to save than with an automatic savings plan. If you are already using direct deposit for your paycheck, have your financial institution transfer a certain amount each month into a savings account.

 

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