Approximately how long would it take to pay the mortgage off? Also is Bi-Weekly payment option really worth it? I know they charge a setup fee for about $395.00. But wouldn't it be better to pay an extra $200.00 per month x 12 months (=extra $2,400.00 per year) toward prinicple with a separate mailed in check and letter of explanation with the words "Payment Toward Principal" written on the check.
Interest Rate: 8.990% Fixed.
2007-07-24 05:58:55 · 6 answers · asked by g_loria53 1 in Business & Finance ➔ Renting & Real Estate
Make sure that you don't have a prepayment penalty clause in your contract before you start paying down on the principle.
I paid mine down faster just by including whatever extra that I could afford. For example, if the interest is X amount and the principle is X+, then just add the X+ number to the next check, this method will advance your payoff date and save a lot of interest money. This is easier and doesn't involve any other expensive paper work. Just verify that prepay is ok.
Best wishes
2007-07-24 06:09:50 · answer #1 · answered by tylernmi 4 · 0⤊ 1⤋
Yes, you are 100% correct. Many people think they have to pay a fee to do this, you do not. Almost all mortgages are simple interest, which means interest is paid in arrears (earned interest) therefore paying June 1st payment means you are May's interest based on that unpaid principal balance. You yourself can write a separate check for ,say $200 per month, there reducing the principal balance that next month interest payment is based on. Make a 2nd check towards principal, or if you feel froggy, get on line to amortization schedule and put in your loan amount and rate then enter the term you want to have it paid off in, like 15yrs instead of 30. If you make that payment for 15 start years, the loan will naturally pay off in that time frame. You pay nothing extra for a "set up" fee just to have auto debit twice per month which only equals 1 extra payment per year.
Hope this helps!
2007-07-24 06:25:43 · answer #2 · answered by Etta P 4 · 0⤊ 0⤋
Bi-weekly payments work and will usually take a 30 year mortgage down to about 23 years. If you would like to knock your mortgage down to paying it off in as little as 8 -11 years, such as about a third of the people in Australia and many countries in Europe is doing then check out the 2 links below. This program is moving into the United States and is becoming quite popular due to the tremendous amount of interest being saved
2007-07-24 06:53:14 · answer #3 · answered by theamishboy 3 · 0⤊ 0⤋
This is the typical formula. Very simple answer.
The 13th Payment!
When you pay bi-weekly, all your doing is paying a extra month in a year.
So long as you make a full 13th payment, no matter when within the year or how it's broken up. = Paying off mortgage faster.
You can google: Extra Payment Mortgage Calculator
This will show you your payoff time if you make extra payments.
Simple and easy.
Hope that helps!
Http://www.myfinancialcorner.com
2007-07-24 06:10:57 · answer #4 · answered by Anonymous · 0⤊ 0⤋
If you just got that loan and you have a 30 yr fixed, you would pay that loan off in 179 months with $200 extra a month. Don't pay to have bi-weekly set up. You are right. Do it yourself.
2007-07-24 07:04:49 · answer #5 · answered by ? 4 · 0⤊ 0⤋
Interest is too high!
biweekly program does work!
try it weekly as is they removed the every friday!
and you can set how much extra you want to pay!
my mortage is 2600.. thats 625 per week but i set it for every tuesday 800 is deducted from my bank account for my mortgage!
i like the idea..is from citibank! it takes away 2-5 years fro your 30 year loan.. mines for 15
2007-07-24 06:02:36 · answer #6 · answered by Anonymous · 0⤊ 1⤋