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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.” |
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