Great tip for homeowners - pay your mortgage bi-weekly!

Wanted to share this great tip with you guys for anyone who has never heard this. I saw this on Oprah and just today called my mortgage company and switched over. Here is the tip...you pay your mortgage every 2 weeks instead of monthly and every year you will have made 26 payments which in turn equals one full monthly payment. This will pay off your mortgage 6-8 years sooner depending on the amount of the mortgage. I just called my Mortgage Company and will now pay automatically every 2 weeks. We did the calculations and my mortgage will be paid off in 23 years instead of 30 and I will save close to 54,000 in interest. So definitely call your mortgage company and inquire about this great money saving tip.

Message edited 8/10/2006 10:35:59 PM.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

Yes!!!! We just signed up to do this through our bank, Washington Mutual. It is so great, if you can swing it. It can lower the number of years on your mortggage and save so much $$$.

It is a great idea. Good Luck to those who can do it.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

They say you can do the same thing by just making an extra mortgage payment a year and having it go towards principle. Also, I would think rounding up to the nearest dollar as well helps out over time.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

Message edited 8/11/2006 7:06:48 AM.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

Just be careful that your bank doesn't charge fees for this. I have heard that some banks do and you can easily pay biweekly or, like Vicki said, pay extra at each month (that's what we do)

Re: Great tip for homeowners - pay your mortgage bi-weekly!

Posted by 2Pisces

Yes!!!! We just signed up to do this through our bank, Washington Mutual. It is so great, if you can swing it. It can lower the number of years on your mortggage and save so much $$$.

It is a great idea. Good Luck to those who can do it.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

Yep I do this too! It's great! WaMu sent us the letter to do it when we opened the mortgage and we did. The great part about it is, the months you have to make three payments is the month you usually get an extra paycheck so it works out!

Re: Great tip for homeowners - pay your mortgage bi-weekly!

DH found out about this the other day...We are goin this weekend to change it over...We are not going to do automatic payment though, the office is around the block!

Re: Great tip for homeowners - pay your mortgage bi-weekly!

Re: Great tip for homeowners - pay your mortgage bi-weekly!

We pay an extra $1000 towards the principle every month.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

my co worker does this, he's been in his house for 7 yrs and said it will be paid off in less than 15 yrs.

then again he bought when prices were not where they're at now. he said that if he bought his house in Ellwood today, he wouldn't be able to do that.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

Thanks Kim!

I was sending more at the end toward principle, but it would be easier to split the payments in half and pay it each time I get paid (DH gets paid bi-monthly, so that doesn't help).

Re: Great tip for homeowners - pay your mortgage bi-weekly!

This is a great idea! Thanks for the tip, I will try to set this up before moving into our new house.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

my bank is always sending us info on this, but like someone else said if you make one extra payment a year towards your principal its kinda the same thing. Although we would love to do this, we can't possibly afford to...it's just too much but this is a great tip

Re: Great tip for homeowners - pay your mortgage bi-weekly!

Pay Off Your Mortgage Early
by Suze Orman
BUT NOT THIS WAY

As you all know, I'm a big proponent of paying off your mortgage as soon as possible. But please steer clear of a new bank-sponsored gimmick called an "equity enhancement program" that claims to help you do this. The pitch, when you get it, will probably come as a letter from your bank promising to help you reduce the cost of your mortgage with no refinancing. But it will end up costing you money if you sign up. Here's why.

The program works by requiring you to make two smaller mortgage payments, one every two weeks, in place of the single larger monthly payment you're making now. The bank will deduct the payments directly from your checking account. Fair enough, but let's see how it plays out. Let's say your current monthly payment is $2,241.91 on a mortgage that's a 7.625-percent fixed 15-year loan totaling $240,000. Let's say you have 14 years and 7 months to go on the loan before it's paid off. If you stick with your current plan, you'll pay total interest of $166,534.09. The new program says that by simply taking money out of your bank account every two weeks instead of every month, and paying $1,123.46 each time instead of $2,241.91, the total interest you'll pay will be reduced to $147,047.89. You will have satisfied your mortgage in 12 years and 9 months, and will have saved $19,486.40 in interest.

But here's the rub, in smaller print: There is one-time lifetime program fee. In the case of Wells Fargo's program, it's $295. And there are monthly participation fees that eat up another $5.42 a month. Over 12 years and 9 months, those fees add up to $1,124.42, money that you could be earning interest on. And you can accomplish exactly the same thing by making one extra mortgage payment a year on your own. There are two good ways to do that: You can add one twelfth of that extra annual payment to your mortgage check each month. Or you can simply write a check for one extra payment at the beginning of each year and get it over with. There's no charge for that. So though I'm an advocate of paying off mortgages early, I am not an advocate of these offers you're getting in the mail. Don't be suckered in.


There are two biweekly calculators on this page which are very helpful.


LINK

Basically a 30 yr loan would become a 24 year loan if the principles are applied. However, its important that your bank does not charge a fee for this privilege. Especially if it a monthly fee above and beyond a flat fee.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

We make one extra principal payment each year..


eta: usually mid summer..

Message edited 8/11/2006 11:10:10 AM.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

We put a chunk towards the principal every year when we get our tax money back. I did this when I owned my co-op and in 2.5 years reduced my balance drastically.

I couldn't do the bi-weekly payments because of the way our other bills come in.

Re: Great tip for homeowners - pay your mortgage bi-weekly!

Re: Great tip for homeowners - pay your mortgage bi-weekly!

oh, crap...the extra payment is due to debit in 3 days...

sigh..