Kevin Martini is the host of the Martini Mortgage Podcast and on Episode 032 shares the #KevinMartiniLive Skip the Coffee concept. Skip the Coffee is a concept that Kevin Martini developed based on the premise that one should look at small purchases the same way they look at large purchases.
“If one took a serious look at the small things they spent money and said no to that latte and allocated those monies towards their home loan principal, they could make a huge difference in getting your mortgage paid off faster”. – Kevin Martini
Carving out of you daily budget just $5.00 a day (i.e. $150.00) a month could save years off your mortgage.
In Wake County, North Carolina….the median priced home was was 307,630.00. On November 21st 2018, according to the Freddie Mac Primary Mortgage Market Survey, the U.S. weekly average for a 30-year fixed was 4.81% with .4 points. So, if you got a 30-year fixed rate mortgage at the rate of 4.81% & put 20% down…you would have a an estimated principal and interest payment every month of $1,293.00 dollars and after 30-years you would have no mortgage.
If you added $5.00 to your principal everyday that would mean you would be making a payment of $1,443 every month…this payment would be for your principal and interest along with an extra $150.00 principal reduction every month. If you can do this, that would mean you could, you will have reduced your principal by over $10,000!
Now how do you come up with that extra $5.00 a day — by foregoing this seemingly insignificant daily purchases and reallocating those finds to your mortgage.
I define long term as 15-years. Without deploying the Kevin Martini Skip the Coffee concept, in the example above, you would have paid $232,688.00 of principle and interest. With the Kevin Martini Skip the Coffee strategy of allocating just $5.00 a day to your home loan principal, you will have paid $259,688.00 of principal and interest however, you would have over $39,000 more equity in your home and your loan balance would be 126,071 vs not applying the skip the coffee strategy where the loan balance would be over 165,000.
NOTE: the analysis above denotes the forecasted appreciation…please know that forecasts on appreciation are not 100% accurate however based on the forecast assumptions the median priced home in Wake County today could be worth $421,706.00 – that means with the Kevin Martini Skip the Coffee concept, based on the example above, one would have equity of over $295,000.00!
If you or someone you know has questions about the Kevin Martini Skip the Coffee concept or questions about the Raleigh mortgage rate environment or questions about the unique mortgage products the Martini Mortgage Group at Benchmark Mortgage offers, just reach out to us at (919) 238-4934.
Kevin Martini | NMLS ID 143962 | Branch Manager | Martini Mortgage Group at Benchmark Mortgage | Ark-La-Tex Financial Services, LLC NMLS ID 2143 | 5650 Six Forks Road, Suite 101 Raleigh, NC 27609 | (919) 238-4934 | www.KevinMartini.com | Kevin.Martini@Benchmark.us | Equal Housing Opportunity