Learn how a mortgage with FAIRWINDS can help you achieve the debt-free lifestyle you've been looking for.
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The FAIRWINDS Difference
It's widely accepted that mortgage lenders want you to take out as much debt as you can possibly afford, all while earning themselves a handsome profit off your interest payments. Well, we don't agree with this approach. In fact, we've built our entire strategy around helping you achieve a debt-free lifestyle as quickly as possible. We recognize the many benefits of becoming debt-free and we're here to support you on the journey towards our shared goal.
We developed our easy-to-use mortgage (home loan) calculator to show you just how much you can save with the right mortgage plan. Your mortgage is likely to be the longest-lasting and most expensive loan that you'll ever take, and therefore it's an especially important step towards your financial independence. Additionally, we've covered the benefits of a debt-free lifestyle and a shorter mortgage term with the goal of empowering you to make the best financial decisions for the life that you want to build.
Why Be Debt-Free?
The reason we focus so heavily on eliminating debt is, frankly, because we believe Americans need it. There's already a wealth of statistics that support our position. Surveys show that 1 in 3 Americans1 think that they'll never be free of debt, the biggest contributor to this being mortgage debt.
Even more striking is that as many as half of American households are living paycheck to paycheck.2 39% of Americans can't afford an unexpected $400 bill.3 It's clear that the burden of debt is one of the main reasons behind these sobering statistics. Debt can rope you into a vicious cycle of paying a lot every month, without an end in sight.
Worryingly, only one in four Americans is debt-free.4 Needless to say, achieving a debt-free lifestyle gives you greater control over your financial situation and greatly improves your ability to handle unexpected expenses. On top of that, you save thousands of dollars that you would have paid in interest fees and consequently have much more spare income to build wealth or live generously.
There are also numerous psychological benefits of getting rid of debt. Doctors have found that a debt-free lifestyle can improve your marriage, relieve stress, eliminate feelings of guilt and help you provide a great example for your children.5 We want to empower you to build a debt-free lifestyle that you'll be happy to have and perhaps even set as an example for your children.
Mortgages Can Take Decades to Payoff
For the most part, no one is ever going to take a loan that will require as much time to pay off as their mortgage. Even if you put a 20% down payment, you’re still going to end up borrowing hundreds of thousands of dollars that you’ll have to pay off bit by bit. Your mortgage can be an almost overwhelming commitment and investment that most people spend much of their life paying off. It’s this length and scale of commitment that makes adequate mortgage planning so essential, not to mention that it’s vital you explore your options.
We developed our mortgage payment calculation tool with a simple mission in mind. People should understand their mortgages before taking them out, choose a loan amount that fits their budget and secure the shortest possible mortgage term. Overall, saving on your mortgage and shortening your mortgage term is one of the most important financial achievements you’ll ever have the opportunity to make.
Why A Shorter Mortgage Term is so Beneficial
It's no secret that mortgage lenders make the majority of their profit in interest payments. Your mortgage is going to have an annual percentage rate (APR), which is how you pay back the mortgage lender for letting you borrow the money. Of course, this means that you’re going to be paying that fee every month that your mortgage persists. The longer your mortgage term lasts, the more interest you'll pay back. For instance, just take a moment to think about how much you’ll pay in mortgage interest over the course of a decade. In a sufficiently long mortgage with unfavorable APR rates, you might end up paying enough to buy your home twice over!
That's not the full extent of interest though. Naturally, when you have a long mortgage term, the total cost of your loan ends up spread out over a higher number of years. Naturally, this means that your monthly payments are a little bit cheaper. While this may sound appealing, it’s quite deceptive in reality. Instead of thinking short-term, month-to-month payments, think about it from a long-term picture and how much you'll pay back in interest over the life of the loan.
The Hidden Costs of a Long Mortgage
Mortgage lenders calculate your mortgage fees based on the remaining value of your loan. For starters, let's illustrate this with a simple example. If you pay off $10,000 of a $100,000 mortgage in your first year, then your interest during the second year would be charged on the remaining $90,000. However, if you only paid off $5,000, you'd be paying interest on $95,000. Over the course of years and decades, this can have an unimaginable, cumulative effect on your total mortgage fees. You’ll deal with higher interest payments, which make it harder to pay down more of your loan, thus saddling you with higher interest payments. The way that mortgage lenders structure mortgages can easily produce this sort of vicious cycle that can easily make hundreds of thousands of dollars worth of difference by the time you pay off your mortgage. Scheduling a longer mortgage term has an exponential effect driving up your total expenses far more than you’d realize.
This is why we believe that a shorter mortgage term is the most effective way to save money on your mortgage. You should always focus on eliminating your debt as fast as you can so you can focus on building wealth.
Let Us Do the Math for You
For example, let's say that you're taking out a $250,000 fixed rate mortgage. A 30-year loan with a standard APR of 3.372% would give you a monthly payment of $1,104.83. While this might not seem too bad at first glance, over the course of the mortgage you would end up spending $147,737 in interest. This means that you'd end up paying back just under $400,000 over life of the loan. That's over half of your property's worth!
Needless to say, we want you to spend much less than that. That's why we offer our 15-year mortgage. Let's make our calculations again on a 15-year mortgage. Assuming an APR of 2.485%, your monthly payments would be $1,665.21. So, throughout your mortgage, you'll end up paying $49,737 of total interest. That's right, you'd be saving up an eye-watering $98,000 just in interest! Imagine what you could do with those savings. That's exactly why we believe that a shorter mortgage can be your key to achieving financial freedom.
Let's Try a Different Property
If that's not convincing enough, let's try another example. Let's say that your years of hard work have paid off and you're finally able to afford your dream house. For that, you take out a $650,000 mortgage. 30 years, 3.372% APR, $2,872.55 monthly payment. Sounds reasonable enough. However, if you calculate the interest you'd end up accumulating, you may be shocked to realize that you'd end up paying $384,117. Yes, that's just in interest.
Let's see what a 15-year mortgage would look like. Again, using 2.485% APR means that your monthly payment will end up being $4,329.54. If that seems a little steep, please consider that the total interest you'd end up paying is just $129,317 over 15 years. This ends up saving you an entire $254,800 compared to a mortgage for 30 years. That's right, over the course of your mortgage you'd end up saving so much that you would be able to purchase the property from our first example. The choice is clear; get a 15-year mortgage and reap the benefits.
Try Our Simple Mortgage Calculator
If all the numbers from our examples seem a bit overwhelming, do not fret. We know that calculating interest can be challenging and monthly payments can be deceiving. That's why we developed our own mortgage amortization calculator above that gives you a clearer picture of all the savings you can make. Your mortgage payment includes principal and interest and we break it down for you along with some other factors to consider.
Enjoy a Debt-Free Lifestyle
Many people are drawn into the allure of a 30-year mortgage, with its low payments and the ease of repaying it. Before you fall for this siren song, you need to understand the hundreds of thousands of dollars that you can save by choosing a 15-year mortgage term. Look no further; our mortgage loan calculator shows just how much you can save by taking out a shorter mortgage. Not only will you save tremendously by taking out a shorter loan term, but it will also help you achieve financial freedom so much sooner. In less than two decades, you’ll have the safety and security that comes with being a full homeowner and you can start enjoying a fearless, debt-free life.
Frequently Asked Mortgage Questions
Here are few common questions people have about mortgages and home loans available to anyone living in the United States.
Using our simple mortgage calculator, you can easily see what your mortgage payment would be. Then, compare how much interest you can save on a 15-year mortgage versus a 30-year mortgage.
Most people only think of negotiating the price of the home with their real estate agent. Actually, most of the money to be saved is in the mortgage. You could save around $98,000 in interest by financing a $250,000 mortgage for 15 years versus 30 years. Compliment that with bi-weekly payments and you could save even more interest on your mortgage.
Your mortgage interest rate is based on many factors like your credit score, down payment, debt to income ratio, loan term, and amount financed.