Wednesday, November 6, 2013

Alternatives to Bi-Weekly Mortgage Payments

Effective Alternatives To Bi-Weekly Payments

Bi-weekly payments plans work; there's no doubt about that. It's just basic math. However, there are several reasons why homeowners may want to avoid enrolling in a bi-weekly mortgage payment plan.
The first -- and most obvious -- reason to avoid bi-weekly mortgage payment programs is that homeowners choosing to self-manage their bi-weekly payments get better results than via a bank-managed bi-weekly payment program.
Here's how to self-manage : Rather than sending payments to the bank every other week, achieve the same result by making your regular mortgage payment once monthly, and adding 1/12 of your regular mortgage payment to your check.
For every $1,200 in your mortgage payment, in other words, add $100 to your monthly payment. By sending $1,300 to your lender monthly, you will "overpay" your mortgage by $1,200 annually, which is a 13th payment.
Assuming a $300,000 mortgage at 4.000%, look at how the math works :
  • Bank-managed bi-weekly mortgage payments pays off in 26 years, 0 months
  • Self-managed bi-weekly mortgage payments pays off in 25 years, 11 months
This math works because banks don't apply that 13th payment until the year is complete. By contrast, your self-managed system applies 12 times per year. Please visit our website for more information www.7thlvl.com

1 comment:

  1. Awesome work! That is quite appreciated. I hope you’ll get more success.

    Mortgage Advice poole

    ReplyDelete

Thank you for visiting us at 7th Level Mortgage, LLC we will attempt to answer your questions as soon as possible. 7th Level Mortgage does not offer legal advice. Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency. Please consult your attorney and/or accountant for any legal or accounting advice.