Today's economic conditions have a lot of people looking for ways to save money. A good friend of mine, who just happens to be in the mortgage industry shared the following with me:
Consider a Bi-Weekly Mortgage and save thousands in interest over the life of the loan. Imagine reducing the interest payments and cut the time it takes to pay off your mortgage! Here's how it works:
Normally you pay your mortgage once a month or (12 payments annually). The Bi-Weekly scenario will allow you to divide your payment in half and pay half every two weeks. For example, if you took out a 30 year, 6% Fixed mortgage for $150,000 mortgage, your monthly mortgage payment for principal and interest would be about $899. Make payments for 30 years and you'll pay $323,968 ($150,000 of that being of principle). The remaining balance ($173,968) is the interest paid. However, if you pay Bi-Weekly....you will only pay $136,671 in interest (saving you $37,296 in interest)!
Sounds good? Check your mortgage papers and make sure that you do not have a prepayment penalty. Finally, make sure that you notify your bank and discuss in detail the provision to pay Bi-Weekly. This will help you save thousands in interest (therefore, saving you money), build equity more quickly, and even improve your credit rating.
No comments:
Post a Comment