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Bi-Weekly Mortgage
Getting your loan is just the first step. Our interest, when we put a loan together for our clients, is to get their mortgage paid off as soon as possible. There are many tools to do this, all of which we will talk with you about and it all involves how you use your money. One of the tools we advise is having your mortgage set up as a Bi-Weekly Mortgage.
Why? It is no secret to most of you by now that by making an extra payment a year you will cut anywhere from 6-10 years off your mortgage. For those of you who have the discipline to do this on your own, you don't need the Bi-Weekly program. We just urge you to exercise that discipline! However, regardless of our best intentions and the obvious benefits in doing this, many of us just don't do it. We want to, we intend to, but somehow it just keeps getting put off until next month, or for when we receive our tax refund, or whatever. The reality is that, with the kids, the rising cost of living, and all the other things we need our money for from month to month, it just doesn't get done.
The Bi-Weekly Mortgage is a Disciplined Savings Plan. Here's how and why, using a $100,000 loan at 8% interest as an example (we will run a complete analysis based on your loan so you can see how it will affect you directly):
By doing nothing, the total cost a $100,000 loan over 30 years will be $264,144.31, paying $164,144.31 in interest.
By setting the mortgage up on a Bi-Weekly basis, The total cost of the loan will be $209,021.41, paying $109,021.41 in interest. Total interest saved is $55,122.90, with an effective interest rate of 5.703%, and you will pay off the loan in 21.4 years.
If you choose to have another $25.00 per payment added to your Bi-weekly payment, the total cost of the loan will be $190,858.60, with total interest paid only $90,858.60. Total interest saved is $73,285.70, with an effective interest rate of 4.891%, and you will pay off the loan in 18.3 years.
So what's the catch. No catch, you just pay the Bi-Weekly organization $3.50 per debit from the account you normally use to make your mortgage payment, or $7.00 per month as a service charge for doing all the work for you (collecting and making the payments to your lender). It's included in the debit from your account.
We have to pay to have this service set up for you, so if you have the discipline to make an extra payment a year on your own - great. But we are so intent on making our service to you as complete and beneficial as possible, we are glad to set you up on the Bi-Weekly Mortgage program if you would like.
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