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A Mortgage and Bank Trick You Should Avoid at All Costs
Once you've purchased your home, you will begin to get
correspondence from your lender about a "Mortgage Reduction
Program," in which you can cut years off your mortgage, without
adding money to your payment. This is another trick bankers have
to get you to give them your payment sooner, so they can hold it
in escrow and make more money off of you.
The program arranges for you to make your mortgage payment
bi-weekly. In other words, you cut your monthly payment in half
and make it every two weeks. Basically, all the bank is doing is
collecting an extra mortgage payment, over the course of a year
and adding it to your principal loan amount. This cuts five to
seven years off your 30-year mortgage term. Here's the secret
they don't want you to know.
First, you can do this without them. Simply add to your
principal loan amount on any given month, when you can afford to
do so. You'll learn more about this, in the section on ARMs.
Second, the banks charge you a hefty setup fee, usually $250 to
$350, as well as a monthly processing fee. You don't need to pay
this, ever! Again, you simply add money to the principal loan, in
the same check you use to pay your monthly mortgage. In fact,
your mortgage invoice provides a box that specifically says,
"Additional Principal." If you want to cut seven, 10 or even 15
years off your loan, just ask your mortgage professional how much
you need to add each month or each year to meet that term.
The most exciting part of this plan, though, is not the years
you cut from the term as much as it is the tens of thousands of
dollars in interest you save. For example, on a $150,000 loan, if
you add just one extra payment each year to the principal loan
amount, you'll save well over $60,000, if you keep your mortgage
for its entire term. And, if you set it up through payroll
deduction at your workplace, you won't even notice the money is
gone. This is a very powerful program and a great way to beat the
bankers at their own game.
If you are interested in learning more about how much interest
you can save by adding to the principal loan amount, go to a
mortgage calculator site on the Internet, and ask the computer to
do it for you. The best web site I have seen for this is Karl
Jeacle's Mortgage Calculator. You can locate it on the Internet
by simply doing a keyword search for mortgage calculator. Check
it out, and you can beat the bankers at their own game.
Mark Barnes is the author of the new novel, The League, the
first work of fiction, based on fantasy football. He is also an
investment real estate and home loan finance expert. Learn more
about his suspense thriller at http://www.sportsnovels.com Get
his free mortgage finance course at http://www.winningthemortgagegame.com
 MORE RESOURCES updated Thu. February / 09 / 2012
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New HARP Could Help Up to 6.7 MillionNASDAQOther changes to the program were designed to make it easier for homeowners with private mortgage insurance (PMI) to refinance or to obtain a HARP mortgage refinance with a lender other than their current mortgage servicer. In addition, new limits were ...and more » |
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