July 23rd, 2012
Categorized under: Thrifty Blog

CDs vs Mortgage Interest

 Let’s talk about interest rates. I have a CD that earns 2.5% interest. However, for my home loan I pay 4.65% interest. That’s a difference of 2.15% interest.

As far as I’m concerned, this is a no-brainer. I cashed in the bond and applied it to the mortgage principle, saving myself 4 years and 3 months off the term of the loan. Total interest saved $26K. Much that’s a much higher return than the CD would have paid out.

Progress $123,764.47:

 

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Comments

  1. With that spread, definitely a no brainer to pay down the mortgage as well.

    Have you thought of refinancing? I just did this spring and got my 5/1 down to 2.625% from 3.125%. All costs included.


    Financial Samurai
    July 24th, 2012

  2. I am working on it FS. We have a 30 year and my wife is very risk adverse. However, I’m really loving the 5/5 not cost loan that Pen Fed offers at 2.710. It would increase our yearly cash flow an extra $2K. That’s free money. I will convince her yet. I’m sure of it.


    admin
    July 24th, 2012