Real Estate and Home Mortgages - NO "Mortgage Accelerator" programs
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igneous
10-23-07, 02:23 PM
I've read to avoid all the companies that will charge you to basically make an extra payment per yr. on your mortgage. They set you up to pay half your mortgage every 2 weeks--
26 a yr instead of 24. (If you pay twice a month you only pay 24 payments.) Anyway, I read where you can cut many yrs off your mortgage by doing this yourself without set-up charges and fees from another 'service' company. Just take your mortgage amount and divide by 12, then pay that extra amount to principle every month. But my question is...do you
use your mortgage amount only, or your total monthly payment (taxes and insurance too) to divide by 12??
26 a yr instead of 24. (If you pay twice a month you only pay 24 payments.) Anyway, I read where you can cut many yrs off your mortgage by doing this yourself without set-up charges and fees from another 'service' company. Just take your mortgage amount and divide by 12, then pay that extra amount to principle every month. But my question is...do you
use your mortgage amount only, or your total monthly payment (taxes and insurance too) to divide by 12??
Family Guy
10-23-07, 03:22 PM
The principle and interest figure, that's all that matters for that. Of course, the more you pay the better, so if you can do that go ahead.
Most important factor is to choose a figure you can do monthly, that is realistic. Not $100 this month, $20 next month....just stick to $50 or so and do it every month as a habit. Be sure to itemize it as additional to principle on your statement/payment coupon--there should be a space for that. NOT additional towards escrow. Also a good idea to write that extra amount on a 2nd check, with "principle payment" written in the memo. That gets extra attention in processing and then you have TWO checks in your monthly statement (most have copies of your checks) for your permanent file in case the money gets applied incorrectly and you need to have it fixed later.
Lenders love the bi-weekly program, I don't know of any that charge to do this, but then I haven't talked to them all either. I do prefer the method you describe--do it yourself. Bi-weekly can be GREAT for people on that pay schedule at work, since it makes budgeting easier. However, if you are NOT on that schedule, know that twice a year you'll have 3 of these partial payments, not just the usual 2. Forgetting that can upset your budget. Biweekly is also a nightmare to keep up with if you aren't paid on that same schedule, since you'll have auto-deductions to remember to keep up with every 2 weeks.
Most important factor is to choose a figure you can do monthly, that is realistic. Not $100 this month, $20 next month....just stick to $50 or so and do it every month as a habit. Be sure to itemize it as additional to principle on your statement/payment coupon--there should be a space for that. NOT additional towards escrow. Also a good idea to write that extra amount on a 2nd check, with "principle payment" written in the memo. That gets extra attention in processing and then you have TWO checks in your monthly statement (most have copies of your checks) for your permanent file in case the money gets applied incorrectly and you need to have it fixed later.
Lenders love the bi-weekly program, I don't know of any that charge to do this, but then I haven't talked to them all either. I do prefer the method you describe--do it yourself. Bi-weekly can be GREAT for people on that pay schedule at work, since it makes budgeting easier. However, if you are NOT on that schedule, know that twice a year you'll have 3 of these partial payments, not just the usual 2. Forgetting that can upset your budget. Biweekly is also a nightmare to keep up with if you aren't paid on that same schedule, since you'll have auto-deductions to remember to keep up with every 2 weeks.