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Are Biweekly Mortgages Really Worthwhile?
You may have heard people, especially mortgage lenders, extolling the virtues of biweekly payments, saying that you can
save thousands of dollars and take 5-7 years off your mortgage--and then offering to set up a biweekly plan for you for
as little as $400. But you don't have to spend $400 to begin saving money and time on your mortgage. In fact, you don't have
to spend anything at all! You can set up a money-saving mortgage payment plan yourself--easily and at no extra cost.
The key is to look carefully at the fine print in many biweekly plans. You find that even though you'd be making
biweekly payments, the lender may only post them to your account on a monthly basis, which means that you wouldn't be saving
anything on interest, because mortgage interest is paid in arrears (as opposed to rent payments, which are paid in advance).
Your only real savings would be in the fact that you'd be making the equivalent of one extra payment a year. That's a good thing,
of course, but you don't need to pay someone $400-500, possible monthly maintenance fees, to be able to accomplish the same results.
Here's how biweekly payments save time and money: By making biweekly payments, you actually end up making an extra monthly
payment each year. Over the course of a year, you'd make 26 payments (one every other week for 52 weeks), which is the same
as making 13 monthly payments. Making one extra payment per year will shorten the life of your loan and save you thousands of dollars.
But you don't have to make biweekly payments to obtain those savings. Here are a couple examples of how you can save big money, using the same basic idea:
If you get paid every two weeks, divide your monthly principal and interest payment in half and then send your lender a check
for that amount during those months in which you receive three paychecks. Just sending in those two extra checks will be the equivalent of one extra payment a year.
If you don't want to send lump checks, you can get the same results by dividing your monthly principal and interest payment
by twelve and then adding that extra amount to your payment every month. Normally, that figure won't put too much extra strain on
your budget, and it will add an extra mortgage payment to your loan every year.
You really can save significant amounts of money and shorten the life of your loan by making extra payments, but you
definitely don't have to pay a lender $400-500 to do it. Making those extra payments is easy to do yourself, and at no extra charge--which is always a good thing.
Copyright © 2005 Jeanette J. Fisher All rights reserved.
Professor Jeanette Fisher is the author of "Doghouse to Dollhouse for Dollars," "Credit Help! Get the Credit You Need to
Buy Real Estate," and other books. Real estate financing questions? Visit the new Real Estate Credit Help Center for
articles, Credit Tips ezine, and blog: http://www.recredithelp.com
 MORE RESOURCES updated Mon. September / 06 / 2010
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Mortgage Terms Explained
When you are hunting for a mortgage, you will find that
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An offset mortgage is very similar to a current account
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separate to the rest.
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You've undoubtedly heard or seen ads for mortgages with
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In today's overheated housing market, lenders are making it
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When you refinance your home mortgage, lenders often tempt
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Few of us invest the time and effort into researching and
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and expensive purchase we ever make!. We invest a lot of time
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Finding home mortgage loans are a reality for people with
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If you are a homeowner, you've probably received offers to
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(like college tuition or home improvements) that have
irregular payment schedules.
First Time Buyer
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Owners
Having just settled in life, you are finding the rentals
putting too much of a burden on your finances.
Nevertheless, you continue the payments thinking that
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Online Mortgage Loan
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There are many reasons to use the internet to take care of
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The Research Rates of Agri Mortgage. First thing, when
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Street security; that reflects the direction of rates.
How to Secure the Best
Mortgage Deal and Save Yourself Thousands in
Interest
When you consider that the average home owner will pay out
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When the time comes to do work around the house, finding
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If you're looking for the best home improvement loan for
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Mortgage
Marketing
W. Edwards Deming said "Marketing and innovation are the
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What is an Interest Only
Mortgage?
An Interest Only Mortgage is one where the repayments are
made up entirely of the interest on the loan. When the
mortgage term is complete, the capital originally borrowed
is still outstanding.
Home Equity Loans - 5
Useful Application Tips
Obtaining a home equity loan does not have to be a major
ordeal. Unlike your first mortgage, you are already in the
home, and usually time is not such a major factor.
What Are Mortgage
Brokers And Why To Use One
"Mortgage" is formed from two words: the French word "mort"
meaning "dead" and the word "gage" from Old English meaning
"pledge". Sir Edward Coke (who lived from 1552 to 1634)
explained the term: the land as considered "dead" to the
mortgagor, as if the person never had it.
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