The Borrower is Servant to the Lender Part 3
When considering the idea of the “borrower being servant to the lender,” let’s look at home buying. The numbers may shock you.
Let’s start with the example of a $300,000.00 loan.
The first thing the real estate agent wants to do is to get you qualified. There are two reasons for this:
- They want to know your credit score, so they don’t waste their time dealing with someone with a 500 score.
- They want to see what the top amount of a loan is that they can get for you. The higher the loan amount, the more money they make. They work on commission. Don’t be fooled by them being your friend. This is how they make a living.
On a 30-year mortgage at 7% interest, you will pay approximately $418,000.00 in interest over the life of the loan. You will pay about $718,527.00 total for that $300,000.00 house. WOW! The bankers are making their living off of you.
The following numbers vary depending on where in the payment process you start and what calculator you use. If you start from the first year, the numbers are better than if you are 10 years into the 30-year mortgage.
If you make one extra mortgage payment per year and write on the check that it should be applied to the principal only, you can knock off 4-7 years on the 30-year loan. This would save you between $66,286.00 and $114,153.00.
If you make two extra mortgage payments per year and apply both to the principal, you can knock off about 12 years and save about $195,357.00 off the $418,000.00 total.
If you make three extra mortgage payments per year and have them all applied to the principal, you can knock off about 14 ½ years and save $227,170.00.
You might ask yourself, where would I come up with $6,0000.00 a year to do all this? If you pay off your credit cards and trade your cars in for ones that you own outright, then take the money from those payments, it might be easy to come up with the money for the extra principal payments and maybe even more.
If you pay off your credit cards and car loans and then your mortgage, it can be quite a relief to no longer be a servant to the lender. It can bring peace of mind that you might not expect. Freedom! It would then be much easier to tithe and save money. It would be easier to carry out what God asks us to do in His Word.
You will have effectively extracted yourself from the debt rat race the men on Jekyll Island set up for us to pay them every month all our lives to make them rich. Instead, we will be servants to our Father.
Learning about finances is part of The Prosperous Life.