Save your equity
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After a home is purchased through the assistance of a mortgage, the owner will begin to think about gaining equity, profit. What if you were not profiting nearly as much as you could, but did not know it?
According to the article, “Stop Giving Away Your Equity,” written by mortgage analyst Craig Romero of mortgage-listings.com, most mortgage borrowers are throwing away thousands of dollars in home equity without ever knowing they are doing so.
Romero claims that homeowners can reduce their mortgage term by eight years, while saving money in the process.
“Let's lowball it and say you have an $80,000 mortgage and are paying an interest rate of 7 percent. How much will a bi-weekly payment method save you, versus paying the conventional mortgage off over 30 years? Believe it or not, you would be saving over $25,000.”
The higher your interest rate and loan amount, the more money you can save, through bi-weekly payments.
Paying your mortgage bi-weekly will reduce your loan term by eight years, reduce the amount of interest paid over the life of the loan and will increase your equity sooner because more of your payments will go towards principal rather than interest.
You will also be able to discontinue mortgage insurance earlier because your loan will be paid off earlier. This will save you even more money.
“The bi-weekly mortgage method is also a wonderful option for people who want to pay off their homes in a shorter period of time than the conventional thirty year mortgages allow, but who don't qualify for a standard 15 year mortgage. It offers homeowners more convenience and flexibility than a fifteen year mortgage.”
Also, if you have a 15-year mortgage and need lower monthly payments, and you decide to extend it to 30 years, you would have to refinance. There is no need to refinance with bi-weekly payments.
“So how much is someone going to charge you to save you thousands of dollars and build up quick equity in your home? There are various services available to homeowners that will take control of this process for you.”
But Romero urges you not to waste your money on one of these services. With the proper information, you can configure how to make bi-weekly payments yourself. You can find this information for free over the Internet.
“Unless you're independently wealthy and don't care where your money goes, then you will definitely want to look into paying off your mortgage on the bi-weekly plan, and learning how to do it on your own.”
