I got a letter in the mail from the bank that says paying our mortgage payment bi-weekly instead of monthly could save us $40,000 to $100,000 in interest and reduce our mortgage term by 7 to 9 years without refinancing. How does this work?
The "interest on 15 days instead of 30" isn’t always true. Many mortgage companieswho offer this program just hold the first half till the second half arrives. The mortgage company might make some interest, holding all those half payments for 15 days, but you don’t.The real benefit is that paying every 2 weeks make for 13 months. You make an extra payment which goes right to the principal.Only the mortgage professional will solve your problem. So don’t waste your time just check out the link and discuses your problem.
How does making your mortgage payment bi-weekly save you money?
Leave a comment
Bi-weekly means that you would make 26 payments (half your monthly mortgage each payment) each year instead of 12 payments that you make monthly currently – basically, it is the same as paying one extra mortgage payment each year. You save money in interest because you pay off your mortgage sooner – thus, you may save seven years of interest. You may or may not save 40k-100k… it would depend on how high your mortgage is… you would have to do the calculations to see what you would save. Most banks/lenders offer this program, but they’ll charge you money. You can simply set up bi-weekly payments on your own (if they’ll let you) – or add on additional to the principle each month – or – make one extra mortgage payment each year.
References :
Don’t do it – they will charge you for this
Wipes out any savings.
Just make an extra payment whenever you get some cash to save money in interest in the long run. When are we going to get honest banks that don’t try to milk people out of money for no reason?
Google: Mortgage loan amortization schedule with extra payments
You won’t believe how even one extra payment a year can save you tons of money
References :
paying bi weekly, you make one extra payment per year.
References :
As others have said, you increase the total amount you pay them in a year thus reducing your principle faster and total interest due in the long run. It’s a great thing to do if you have the cash to do so.
I’ve run into problems because I send payments from my bank, but if the timing is a little bit off or the amount is more than $100 or so over my monthly payment then they apply everything to a MISC payment and try to charge me late fees on my monthly payment. I have to call them and straighten it out. They claim is I gave them my bank account number and allowed them to take money from my account this wouldn’t be a problem. (Due to security issues I never allow anyone to pull from my account. I push when desired only.)
References :
The "interest on 15 days instead of 30" isn’t always true. Many mortgage companieswho offer this program just hold the first half till the second half arrives. The mortgage company might make some interest, holding all those half payments for 15 days, but you don’t.The real benefit is that paying every 2 weeks make for 13 months. You make an extra payment which goes right to the principal.Only the mortgage professional will solve your problem. So don’t waste your time just check out the link and discuses your problem.
References :
http://www.wintrustmortgage.com/loan-officer.html?lo_id=10759