How to Save $50k on a Home Loan (the interest rate hack)
Sep 12, 2026Read time - 4 minutes / Disclosure
Saving money on a home loan means:
- More vacations.
- More eating out.
- Less money stress.
Unfortunately, home loans can be a confusing thing.
The Details
According to Rocket Mortgage, most home loans are 100 to 150 pages long and include:
- The deed of trust.
- The mortgage note.
- The escrow account.
- The amortization schedule.
Confusing stuff for most first time buyers.
But learning just one thing about home loans and compound interest can be a massive money saver.
"Compound interest is the 8th wonder of the world."
"He who understands it, earns it, he who doesn't, pays it."
— Albert Einstein
Like most people, I was excited to sign the loan papers to buy my first home.
And hoped I made the right decision.
The lady from the escrow company that handled the purchase of my tiny condo near Seattle, Washington met me at the food court in a mall.
She pulled out my loan documents.
It was a stack of 100+ papers and she said we needed to review them.
That I would need to sign my name 20 or 30 times.
It was intimidating, but exciting to think I'd own a tiny condo with a tiny yard after signing.
The Loan Math
Most of the 30-minute loan signing was a blur, except for one big part.
A paper I had to sign that said how much money I'd pay for my loan over a full 30 years.
It was the one thing I actually stopped to think about.
Here's why..
The history of home loan interest rates going back 40 years looks like this:
Interest rate history
In the 1980s, home loan interest rates were over 18% (the highest).
And during the pandemic, home loan interest rates were under 3% (the lowest).
Today, interest rates average 6.71%.
So that means taking out a $400,000 home loan for 30 years using that interest rate looks like this:
Making the minimum loan payment for 30 years means paying over $900,000.
Double the original loan amount.
That doesn't include taxes, insurance, or any other homeowner costs.
So, why the heck would someone even do this?
It's something I also asked myself when signing the loan papers.
And it's usually for 1 of 2 reasons (or both).
1. To have a place to call home.
2. To have a long-term investment.
The value of a house has been going up and up for decades.
House price history
It's one of the reasons why it often feels like older relatives got a "great deal" on their home.
If that trend continues, 30 years from now people may say the same thing about homebuyers today.
It's the one thing that motivated me to learn how to get 6 more loans to buy 6 more properties after that first tiny condo.
The Interest Rate Hack
Working at a local bank for 10 years taught me a lot.
One of those things was how one little tweak to a monthly home loan payment can change everything.
Here's 3 things to consider (things I wish I learned sooner).
Let's dive in.
1. Saving $50,000
$75 extra per month can go a long way.
On a $400,000 home loan for 30 years with a 6.71% interest rate, here's how that looks:
Paying an extra $75 per month on a $400,000 home loan can save you $50,000+ in interest charges and pay the loan off 29 months early.
2. Saving $100,000
$165 extra per month can change things big time.
On a $400,000 home loan for 30 years with a 6.71% interest rate, here's how that looks:
Paying an extra $165 per month on a $400,000 home loan can save you $100,000+ in interest charges and pay the loan off 58 months early.
3. Saving $150,000
$280 extra per month can be massive.
On a $400,000 home loan for 30 years with a 6.71% interest rate, here's how that looks:
Paying an extra $280 per month on a $400,000 home loan can save you $150,000+ in interest charges and pay the loan off 87 months early.
The bottom line
Paying extra on a home loan is a big decision.
A decision that can result in big things.
Like getting rid of a house payment 5-10 years early and saving a ton of money.
I've also found this little hack to be useful when getting a loan to buy a house.
Especially when I didn't have a lot of money to put down, which was most of the time.
That meant having a bigger monthly payment.
But learning I could work the numbers in my favor by tossing extra money towards the monthly payment whenever possible was a nice little trick to know.
If you own a house or you're planning to someday, I hope this little interest rate hack to save money is useful. Thanks for reading.
That's all for today.
See you next Saturday.
