Meet The New Agency SEO Template From The Avada Team
Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium.
See Our Top Notch Services
Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium.
Our Work
Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium.
Our Plans
Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium.
Standard
- 5 Projects
- 5 GB Storage
- Unlimited Users
Premium
- 10 Projects
- 15 GB Storage
- Unlimited Users
Professional
- 15 Projects
- 30 GB Storage
- Unlimited Users
Extreme
- Unlimited Projects
- Unlimited Storage
- Unlimited Users
Our News
Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium.
The 2% Mortgage Hack Explained
Folks on social media love coming up with so-called “hacks” to excite their followers.In the mortgage realm, this typically means highlighting math that seems unbelievable at first.And it usually revolves around paying down a mortgage ahead of schedule, much to the chagrin of the banks.For the record, the banks probably don’t care that much if at all, since these days they’d probably pay you more if you put money in a savings account instead of toward the mortgage.But I digress – let’s look at the latest hot trend, the 2% mortgage hack.What Is the 2% Mortgage Hack?$400k loan @ 6%Original2% HackPayment 1$2,398.20$2,398.20Year 2$2,398.20$2,446.16Year 3$2,398.20$2,495.09Year 5$2,398.20$2,595.90Year 10$2,398.20$2,866.10Year 15$2,398.20$3,164.41Year 20$2,398.20$3,493.77Year 21-30$2,398.20$0 – paid off!In a nutshell, the 2% mortgage hack requires you to increase your mortgage payment 2% each year.This doesn’t mean just paying an extra 2% based on the original monthly payment.Instead, you pay 2% extra in year two, then 2% more on top of the 2% extra in three year, and so on.Every 12 months, your mortgage payment grows larger, based on the number the year before.For example, let’s look at a $400,000 loan amount with a 6% mortgage rate and a 30-year loan term. Pretty common scenario nowadays.If you were to just make the normal, minimum required payment, it’d be $2,398.20.Now imagine starting in year two, you add 2% to that payment. It’s $2,446.16. That’s not a big jump up. It’s about $48 more per month.For most, this would be manageable, and likely wouldn’t require any lifestyle changes or cutting back.That alone wouldn’t do much though. It would merely shorten your loan term to 28 years and six months.However, it would save you nearly $29,000 in interest. Not too shabby.But where the 2% mortgage hack gets interesting is you compound the extra payments each year.So beginning in year three, we add another 2% on top of the increased payment from year two.That puts payments in year three at $2,495.09. In year four, it climbs to $2,544.99. In year five, it’s $2,595.89.Each year, you’re adding 2% from the year prior. You can do this by multiplying the mortgage payment by 1.02 in a calculator.By year 20, the mortgage payment is nearly $3,500 per month, but it is gradual and knocks down the outstanding loan balance a lot faster.What Does the 2% Mortgage Hack Accomplish?In short, the 2% mortgage hack reduces your total interest expense and shortens your mortgage loan term.Many of the posts I’ve seen about it claim it reduces your loan term by 12 to 14 years, but it depends on the math, aka the loan balance and interest rate.The amount of interest saved will also vary based on those inputs, but the general idea is you can significantly reduce your loan term and save on interest.So instead of waiting 30 years to own your home free and clear, you can own it a lot sooner, assuming that’s a goal.And you can pay a lot less interest in the process.In my example, you’d reduce the loan term by about a decade, so 20 years instead of 30.The interest savings from making extra mortgage payments would also reduce your interest expense by about $135,000.Simply put, you’d have a paid off mortgage in about 20 years and save more than six figures. Nice!You’re Essentially Emulating Inflation by Increasing Your Mortgage Payment AnnuallyBy making a payment that is 2% higher each year, you’re basically emulating the rate of inflation.The dollar’s value erodes each year by around this amount, so by paying the extra 2%, you’re essentially adjusting it to keep pace.This should mean it’s not an extra burden, as your wages/income might also be expected to increase by this amount.And everything else you pay might increase by this amount too, whether it’s your grocery bill or homeowners insurance.It’s also quite common for renters to see their monthly rent get increased by their landlord annually.So if they were paying $2,000 per month, the following year they might be told the new rent is $2,100.That’d actually be a 5% increase, and this illustrates why homeownership can be great. It’s an inflation hedge.You aren’t required to pay more each year with a mortgage, but as this strategy shows, you can save a lot if you choose to.And because 2% is such a small number, it’s a gentle approach to paying extra toward the mortgage without overextending yourself.But is it the best strategy out there?You’ll Save Even More by Paying Extra Earlier OnWhile the 2% mortgage hack is a cool way to reduce your interest expense and shorten your loan term, without a big bump in payment, it’s one of many options.First off, it should be noted that some homeowners may not want to pay off the mortgage early at all.This is especially true for those with low mortgage rates, whether it’s a 2% or 3% rate. For these folks, their money might be better off deployed elsewhere.For those who do want to pay off the mortgage early, you save more when you pay more earlier on.What if instead of 2% beginning in year two, you just started paying 5% extra per month immediately?Well, you’d reduce the loan term by about 15 and a half years and save $211,000 in interest.So you could save more if you don’t wait 12 months to begin making larger payments, and even more if you look beyond a 2% bump.The 2% increase is only $48 extra. Chances are homeowners can go a little bigger, granted over time that number does get exponentially bigger.But you could still implement say a 3% or 4% increase right off the bat and turbocharge the savings of this strategy.Read on: Should I prepay the mortgage or invest instead? Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.Latest posts by Colin Robertson (see all)
Wells Fargo exits another consent order. Is asset cap next?
Bing Guan/Bloomberg Wells Fargo took its latest step out of regulatory purgatory on Monday, when the bank said that a 2018 consent order with the Consumer Financial Protection Bureau has been terminated.So far in 2025, the megabank has ironed out six regulatory issues, leaving only three such matters still unresolved. The largest of those remaining speed bumps is Wells Fargo's 2018 asset cap, a Federal Reserve Board restriction that limits the bank to $1.95 trillion of assets.Amid Wells' substantial regulatory progress over the first four months of this year, analysts who cover the $1.9 trillion-asset bank are optimistic that the Fed will remove the asset cap in the coming months."Bottom line: the news will likely reinforce investors' belief that the asset cap could be lifted sooner rather than later," Scott Siefers, an analyst at Piper Sandler, wrote Monday in a research note. The 2018 CFPB consent order stemmed from the bank's alleged violations of consumer-lending rules in connection with a mandatory insurance program for auto loans, as well as in its processes for charging certain borrowers for mortgage interest rate-lock extensions.At the time, Wells agreed to pay a $1 billion penalty, split between the CFPB and the Office of the Comptroller of the Currency. The OCC's related enforcement action was terminated in February 2025.Siefers wrote that both the CFPB and OCC orders dealt with compliance risk management, which is also a consideration for the Fed as it determines when to lift the asset cap."With the OCC and CFPB now apparently comfortable" with the bank's compliance risk management, "we view the forward progress as a good sign," Siefers stated.The latest consent order to be terminated was the company's last remaining public enforcement action with the CFPB, and the 12th compliance matter to be resolved since 2019, when CEO Charlie Scharf joined the bank.In a press release Monday, Scharf expressed confidence that Wells will complete the work necessary to close its other open enforcement actions. "Today's termination, along with the recent closure of other consent orders, demonstrates that we have completed much of our common risk and control infrastructure work, including work that is required by other orders," he said.Gerard Cassidy, an analyst at RBC Capital Markets, wrote in a research note that he believes the asset cap could be lifted in the second quarter of 2025 "and possibly real[ly] soon."He pointed not only to the bank's brisk progress with regulators so far this year, but also to recent comments by Treasury Secretary Scott Bessent. Bessent said on a podcast last month that he wants to loosen what he called the "regulatory corset."Meanwhile, Wells Fargo's critics are urging caution about lifting the asset cap, arguing that the scandal-tarred bank hasn't demonstrated enough progress.Late last year, Sen. Elizabeth Warren, D-Mass., wrote in a letter to Fed Chairman Jerome Powell that the seven-year-old cap should remain in place until the bank "can show that it can properly manage the risks associated with running a large bank."And in a report earlier this month, the Committee for Better Banks, which is working to unionize Wells Fargo employees, argued that the Fed should evaluate the bank's consumer complaint trends before lifting the asset cap.In addition to the asset cap, Wells Fargo is operating under a 2015 agreement with the OCC, which states that the bank violated part of the Gramm-Leach-Bliley Act that deals with the consolidation and management of bank subsidiaries.Also still in place is a 2024 formal agreement with the OCC involving what the regulator called "deficiencies" in the bank's anti-money-laundering controls.
FHA reverses some Biden era adjustments to foreclosure sales
Certain sales practices for distressed single-family properties that had served as collateral for loans the Federal Housing Administration insures will undergo policy reversals, according to a new mortgagee letter.A 30-day, exclusive advanced sale preference for "claims without conveyance of title" properties must end by May 30. Owner-occupants, nonprofits and government entities have had a preference in those sales, in which mortgagees sell homes without conveying title to HUD.Also, real-estate owned properties listed on the Department of Housing and Urban Development's online Homestore must end a similar 30-day sales preference and revert back to a 15-day period by that deadline. "FHA's evaluation of these policies has revealed the efforts were generally not successful in meeting their intended goals," the administration said in an information bulletin announcing the letter. "Instead, they have delayed sales of foreclosure properties, increased the deterioration of these properties, leading to lower sales prices and increased costs."The data behind the decisionThe mortgagee letter cites numbers showing that 3% or 85 of 2,696 CWCOT sales in 2023 with an exclusive listing period went to owner-occupants, government entities or nonprofits. In 2024, the share was similar at 3% of 4,447 sales. "During the new CWCOT exclusive listing period, very few properties have sold to owner-occupant buyers, and even fewer were purchased by HUD-approved nonprofits and government entities," FHA said in its letter.The share of REO properties that went to owner-occupants inched up after the longer exclusive listing period was added, rising from 44% to 52% at one point over a period of 24 months, but then it fell back to 46% a year later. Most of the sales happened in 15 days, with what appeared to be limited migration into the 15-30 day timeframe."For REO, it's unclear whether the longer exclusive listing period resulted in higher overall sales resulted in higher overall REO sales to owner-occupants or shifted sales from the original listing period," the administration said in its letters.The FHA's two moves mirror another one made recently by the Federal Housing Finance Agency, and is in line with the Trump administration's efforts to scale back government spending."Removing these requirements aligns with the Trump administration goals of reducing unnecessary burdens and saving taxpayer funds," the FHA said in an information bulletin about its mortgagee letter.The backdrop for the changes taking placeThe FHFA in March reversed Fannie Mae's "repair all" owner-occupant attraction strategy involving REO properties and with a similar comment about misalignment between that program's results and its goals.The stakes are even higher for FHA-insured loans, which historically have had more expansive underwriting criteria than mortgages sold to government-sponsored enterprises like Fannie that the agency oversees.FHA loans tend to attract a relatively high volume of lower-income buyers with less of a financial buffer against hardship. As such, the volumes of distressed properties in the FHA sector tends to be higher.March's serious FHA delinquencies at risk of foreclosure were up 63% compared to a year earlier in ICE Mortgage Technology's latest numbers.
What Our Clients Say
Ability proceeds from a fusion of skills, knowledge, understanding and imagination, consolidated by experience.
Beauty is when you can appreciate yourself. When you love yourself, that’s when you’re most beautiful.
