Save Money By Paying More On Your Mortgage

Save Money By Paying More On Your Mortgage

By:


It's the American dream to own your own home and dreamers will go to any lengths to accomplish this even if it means borrowing thousands of dollars to be paid back over a 30 year period. It's quite an obligation to make 360 payments month after month with the bulk of the money going toward interest, at least in the beginning.

Interest on a 30 year loan, will double the price you paid for your home. Interest is never your friend, and works against you around the clock. Wouldn't it be wonderful if you could pay off your debt years sooner and save thousands of dollars?

It can be done. With a little self-discipline and maybe a quick review of your budget, you can accomplish just that. It's no secret that paying the mortgage twice a month, instead of only once will save you thousands and pay off your debt years sooner. This plan is also known as the bi-weekly mortgage plan.

For example: Let's say you paid $80,000 for your home and got a 7% loan for 30 years. If you split the payment in half, and pay every two weeks, you would shave 8 years off the loan, and save $25,000 in interest.

Not a bad deal after all, for just a little extra work. You save more if your loan and interest are higher. This process enables you to pay more toward the principal and less toward interest. Both principal and interest pay off quicker with the extra payment.

Can you obtain the same result by assuming a shorter mortgage term? You certainly can. Because payments will be higher with the shorter term, not everyone can qualify. With the bi-weekly plan, you can take control yourself and enjoy the flexibility.

There are many companies who will set this up for you for a fee ranging from $100 to $400. Or, some will do it free but charge a transaction fee each time you make a payment.

Can you do it yourself? Yes, but talk to your lender and read the fine print in your contract. You may have a pre-payment penalty for paying off the loan ahead of time. Some lenders also tack on a service fee each time you make the extra payment.

Contact your bank to see if they can provide a bi-weekly calculator; this way you will be able to calculate how much money you can save and when you will own your home. You'll also save on private mortgage insurance (PMI) by paying off the loan early.

If you opt for a bi-weekly payment plan, you will be making an extra payment a year, and that will benefit you greatly. You can accomplish the same thing by making an extra payment whenever you can of any amount. When you do this, write a separate check with a note that states the money should be applied to the principal and not the interest.

Most financial institutions are happy to help you with saving money on your mortgage but it's up to you to get the financial ball rolling. For about the cost of dinner and a movie for you and your family each month you can be debt free years sooner and save thousands of dollars.

About the Author:
We offer the best quality sports eyewear. You will find a large selection of name brand sports sunglasses and prescription goggles including Von Zipper Snowboard Goggles. Don't forget to recommend us using SocialAdr - a unique social bookmarking submission community where your favorite sites are shared and submitted automatically.



Article Originally Published On: http://www.articlesnatch.com


Tags: , ,

|

Loading...
Related....
Videos...

Recent Real-Estate Articles

Comments

Still can't find what you are looking for? Search for it!

Loading

Site Navigation:

Copyright 2005-2011 ArticleSnatch, LLC - All Rights Reserved.
Privacy Policy | Terms of Service.