Ever Wonder Why Banks Are In the Business of Lending Money? One word: Interest

Banks make a huge portion of their money by charging you interest on your loans. So, the lower your interest rate, the better. Right?

Well, yes, but that’s only half of the equation — unfortunately, it’s not that simple.

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All Interest is NOT Created Equal

Ideally, you do want the lowest interest rate you can get. A lower rate helps make your principal monthly payments more manageable.

But what “they” don’t teach you is that the amount of interest you pay each month can make up a massive chunk of your total mortgage payment. We call this your interest volume.

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Interest Rate vs. Interest Volume

Whereas your interest rate is fixed, interest volume changes over time.

The more money you owe the bank, the more your interest volume will be. Even with a rate as low as 2.99%, depending on how much you owe, up to 60% of your monthly payments could be dedicated to interest.

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