Florida Mortgage – How to Save 25% on Your Home, the FL SMART Loan

I hope that caught your attention because after I first realized how simple this is to do it definitely caught mine.  It employs two simple and often overlooked FL banking tools and just a bit of up front buying strategy. 

Let’s look at an example because, as we all know, math runs the world!

Scenario 1:  Let’s say you have found the home you want to purchase and will pay no more than $200,000 for it.  Let’s assume you are putting 20% down ($40,000) and the current market 30 year fixed Florida rate is 5.25%.  Your monthly principal and interest payment for this loan will be $883.53 per month and you will pay your friend the bank $158,070.80 in interest over the life of the loan.

Now, let’s employ a bit of FL mortgage strategy to save you that 25% I mentioned. 

Scenario 2: First, rather than offer $200,000 for the home, let’s offer $204,000 with the seller paying 2% ($4,080) towards your closing costs.  This 2% now can be used to buy your 30 year fixed rate down from 5.25% to 4.75% and since it is coming from the seller, it is not coming from your pocket up front.  Your principal and interest payment for this loan will be $851.33 per month and you will now pay your friend at the bank only $143,278.80 in interest over the life of the loan.

Second, let’s choose to make bi-weekly payments to your friend the bank instead of monthly payments.  I know that there are several methods to accomplish this however to me bi-weekly payments are the easiest to budget and since everything else in your home life will be changing why not change the way you pay.  So, now you will be making $425.67 payments every other week and you will now pay your friend at the bank only $118,647.60 in interest over the life of the loan.

Results:  What have you just accomplished using these two simple, available banking tools?  You have saved $51,014 in interest and payment when compared to Scenario 1.  In addition, you have cut 58 mortgage payments and have an effective interest rate of 4.04%.  Finally, you have paid the same amount of interest as if you had paid just $150,127.07 for your new home – a savings of 25%!

This Strategic Mortgage Approach to Residential Transactions, FL SMART Loan as I’ve dubbed it, can be used for any financing, including FHA and VA.  Contact me today for your own analysis.  It’s just math!