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Do you know that every year you're giving away the hard-earned equity in your
home by paying more than you have to in interest?
Most home owners don't
realize they can cut up to seven years off of the length of their mortgage,
saving thousands of dollars in the process. Think it doesn't add up to a lot?
Think again. Let's lowball it and say you have an $80,000 mortgage and
are paying an interest rate of 7 percent. How much will a bi-weekly payment
method save you, versus paying the conventional mortgage off over 30 years?
Believe it or not, you would be saving over $25,000. The more your loan
amount or the higher your interest, the more money this you can save. When you
pay your mortgage bi-weekly, there are a number of factors that come into play.
You're reducing the term of your loan by up to eight years, you're
paying less interest over the life of your loan and you're building up equity in
your home sooner because more of your money is going towards principal than
interest. The savings don't end there.
Due to the fact that your
mortgage will be paid off years in advance, you will be able to discontinue your
private mortgage insurance earlier than you would if you were paying over a full
30 years, thereby saving you even more money.
The bi-weekly mortgage
method is also a wonderful option for people who want to pay off their homes in
a shorter period of time than the conventional thirty year mortgages allow, but
who don't qualify for a standard 15 year mortgage. It offers homeowners more
convenience and flexibility than a fifteen year mortgage.
With a
fifteen-year mortgage, if you want to change to a thirty-year mortgage, you
would have to refinance. With the bi-weekly payment plan, if your circumstances
temporarily change you and need to pay on a monthly basis for a period of time,
there is no refinancing necessary.
So how much is someone going to
charge you to save you thousands of dollars and build up quick equity in your
home? There are various services available to homeowners that will take control
of this process for you. but you can expect to pay anywhere from $99 to $395
set-up fee.
Some companies even claim to offer setting you up on a
bi-weekly plan for free. Take warning to this...these companies always charge a
transaction fee twice a month which average $3.50 each. This equals $84 per year
or a whopping $1,848 over the term of the mortgage.
Not so free
afterall...
Using these companies wastes a lot of the money you would be
saving by implementing such a plan in the first place. There is really no reason
to enlist the help of a company to do this for you, when with the proper tools
and information, you can do it yourself.
Unless you're independently
wealthy and don't care where your money goes, then you will definitely want to
look into paying off your mortgage on the bi-weekly plan, and learning how to do
it on your own.
Craig Romero is an author and mortgage analyst dedicated
to helping homeowners maximize the investment in their homes. Visit his site to
discover how to quickly build at least $40,000 In Home Equity
www.wisemortgageinfo.com |
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