Скачать или смотреть WHY A LOWER INTEREST RATE COULD COST YOU MORE: MORTGAGE REFINANCE WARNING!

When it comes to real estate, many investors and homeowners believe that securing the lowest possible interest rate is the smartest financial move. But focusing solely on interest rate can be misleading. What really matters is the total interest cost over the life of the loan. For example, refinancing a property to get a lower rate often restarts the amortization schedule, putting you back at the beginning where most of your payment goes toward interest, not principal. So even with a lower rate, you may end up paying more interest overall, especially if you restart a 30-year term.

Let’s say you have a $350,000 mortgage at 7%. After one year, you’ve already made a dent in the loan and have more flexibility to make strategic principal payments. But if you refinance to 5%, your monthly payment may be lower, yet your new amortization schedule starts over. Now more of your early payments go to interest again, and less toward principal, making it harder to reduce the total interest cost quickly. What looks like a better deal on paper could slow down your debt payoff strategy and hurt your long-term savings.

The key is understanding that interest cost is not the same as interest rate. A lower rate doesn’t always mean you’re saving more. Real estate investors and homeowners can often save tens of thousands by sticking with a higher-rate loan and applying smart, targeted principal prepayments. That way, you shorten the loan term, cancel future interest, and build equity faster, without the hidden costs of refinancing.

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