- This topic has 157 replies, 19 voices, and was last updated 15 years, 6 months ago by
HLS.
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November 5, 2007 at 7:19 AM #10817November 5, 2007 at 7:49 AM #95785
NotCranky
Participant“The only thing I can think of is that maybe they meant to send in 1/2 month payment every 2 weeks which means that in a full year you would have made 1 extra months payment. They didn’t spell this out correctly.”
I believe one extra payment will take 5 years off, not 10.The advantage to the bank of having 1/2 the money earlier in the month would have to compensate for the rest. Over the years I have seen a few programs like this but am not sure they were designed to shave years off the mortgage. I think they came with a better rate so the benefit was shared with between the borrower and the leder.
HLS could speak to this very well I am sure.
November 5, 2007 at 7:49 AM #95844NotCranky
Participant“The only thing I can think of is that maybe they meant to send in 1/2 month payment every 2 weeks which means that in a full year you would have made 1 extra months payment. They didn’t spell this out correctly.”
I believe one extra payment will take 5 years off, not 10.The advantage to the bank of having 1/2 the money earlier in the month would have to compensate for the rest. Over the years I have seen a few programs like this but am not sure they were designed to shave years off the mortgage. I think they came with a better rate so the benefit was shared with between the borrower and the leder.
HLS could speak to this very well I am sure.
November 5, 2007 at 7:49 AM #95853NotCranky
Participant“The only thing I can think of is that maybe they meant to send in 1/2 month payment every 2 weeks which means that in a full year you would have made 1 extra months payment. They didn’t spell this out correctly.”
I believe one extra payment will take 5 years off, not 10.The advantage to the bank of having 1/2 the money earlier in the month would have to compensate for the rest. Over the years I have seen a few programs like this but am not sure they were designed to shave years off the mortgage. I think they came with a better rate so the benefit was shared with between the borrower and the leder.
HLS could speak to this very well I am sure.
November 5, 2007 at 7:49 AM #95859NotCranky
Participant“The only thing I can think of is that maybe they meant to send in 1/2 month payment every 2 weeks which means that in a full year you would have made 1 extra months payment. They didn’t spell this out correctly.”
I believe one extra payment will take 5 years off, not 10.The advantage to the bank of having 1/2 the money earlier in the month would have to compensate for the rest. Over the years I have seen a few programs like this but am not sure they were designed to shave years off the mortgage. I think they came with a better rate so the benefit was shared with between the borrower and the leder.
HLS could speak to this very well I am sure.
November 5, 2007 at 9:20 AM #95845patientlywaiting
ParticipantIn theory, yes.
But if you send the bank 1/2 of your payment they will apply it ALL to interest so you’re not reducing principal thus making no difference.
Interest is calculated on a full month basis. As soon as the bank applies a payment, they will send you another statement for the next month. You can make your mortgage payments early but you will not reduce principal by making more frequent or early payments (even if, in January you make 1 year’s worth of mortgage and interest payments in advance of when they are due).
The only way to reduce principal is to make additional principal payments on top of your normal monthly payments (more cash flow out of your pocket).
PS: There are some services that purport to do it for you for a fee. They don’t work and what you pay in fee is more costly.
November 5, 2007 at 9:20 AM #95903patientlywaiting
ParticipantIn theory, yes.
But if you send the bank 1/2 of your payment they will apply it ALL to interest so you’re not reducing principal thus making no difference.
Interest is calculated on a full month basis. As soon as the bank applies a payment, they will send you another statement for the next month. You can make your mortgage payments early but you will not reduce principal by making more frequent or early payments (even if, in January you make 1 year’s worth of mortgage and interest payments in advance of when they are due).
The only way to reduce principal is to make additional principal payments on top of your normal monthly payments (more cash flow out of your pocket).
PS: There are some services that purport to do it for you for a fee. They don’t work and what you pay in fee is more costly.
November 5, 2007 at 9:20 AM #95912patientlywaiting
ParticipantIn theory, yes.
But if you send the bank 1/2 of your payment they will apply it ALL to interest so you’re not reducing principal thus making no difference.
Interest is calculated on a full month basis. As soon as the bank applies a payment, they will send you another statement for the next month. You can make your mortgage payments early but you will not reduce principal by making more frequent or early payments (even if, in January you make 1 year’s worth of mortgage and interest payments in advance of when they are due).
The only way to reduce principal is to make additional principal payments on top of your normal monthly payments (more cash flow out of your pocket).
PS: There are some services that purport to do it for you for a fee. They don’t work and what you pay in fee is more costly.
November 5, 2007 at 9:20 AM #95919patientlywaiting
ParticipantIn theory, yes.
But if you send the bank 1/2 of your payment they will apply it ALL to interest so you’re not reducing principal thus making no difference.
Interest is calculated on a full month basis. As soon as the bank applies a payment, they will send you another statement for the next month. You can make your mortgage payments early but you will not reduce principal by making more frequent or early payments (even if, in January you make 1 year’s worth of mortgage and interest payments in advance of when they are due).
The only way to reduce principal is to make additional principal payments on top of your normal monthly payments (more cash flow out of your pocket).
PS: There are some services that purport to do it for you for a fee. They don’t work and what you pay in fee is more costly.
November 5, 2007 at 9:56 AM #95880golfproz
ParticipantI was offered a bi-weekly payment option when I bought my last house. As I recall it knocked off about 6 or 7 years of payments on a 30 year loan. Since I was just scraping by at the time I elected to stay with the monthly payment and when I could I payed extra. A bi-weekly is a good way to go if you plan on staying in the home long term and your finances can handle two large payments per month. I’m a little too scatter brained to make sure I always have that much in my checking account.
November 5, 2007 at 9:56 AM #95940golfproz
ParticipantI was offered a bi-weekly payment option when I bought my last house. As I recall it knocked off about 6 or 7 years of payments on a 30 year loan. Since I was just scraping by at the time I elected to stay with the monthly payment and when I could I payed extra. A bi-weekly is a good way to go if you plan on staying in the home long term and your finances can handle two large payments per month. I’m a little too scatter brained to make sure I always have that much in my checking account.
November 5, 2007 at 9:56 AM #95947golfproz
ParticipantI was offered a bi-weekly payment option when I bought my last house. As I recall it knocked off about 6 or 7 years of payments on a 30 year loan. Since I was just scraping by at the time I elected to stay with the monthly payment and when I could I payed extra. A bi-weekly is a good way to go if you plan on staying in the home long term and your finances can handle two large payments per month. I’m a little too scatter brained to make sure I always have that much in my checking account.
November 5, 2007 at 9:56 AM #95954golfproz
ParticipantI was offered a bi-weekly payment option when I bought my last house. As I recall it knocked off about 6 or 7 years of payments on a 30 year loan. Since I was just scraping by at the time I elected to stay with the monthly payment and when I could I payed extra. A bi-weekly is a good way to go if you plan on staying in the home long term and your finances can handle two large payments per month. I’m a little too scatter brained to make sure I always have that much in my checking account.
November 5, 2007 at 10:16 AM #95901Daniel
ParticipantNo way, Alex. One’s got to make larger or more frequent payments in order to pay the mortgage early (as you say, bi-weekly, for example). It’s as simple as that. More money needs to come out of one’s pocket and go to the bank, it’s basic math. Every two weeks, every full moon, every time the Padres win, whatever. The thing is, if one makes extra payments, then the mortgage will be paid off early.
And, since we’re on this topic, let me address the miracle software thing discussed on a nearby thread. Ahem… I’ll try to put on a straight face… OK, I give up… Bwahahahahhahaha…
But seriously now: how could anybody fall for that scam is beyond me. Do people really have no math skills whatsoever these days?
November 5, 2007 at 10:16 AM #95961Daniel
ParticipantNo way, Alex. One’s got to make larger or more frequent payments in order to pay the mortgage early (as you say, bi-weekly, for example). It’s as simple as that. More money needs to come out of one’s pocket and go to the bank, it’s basic math. Every two weeks, every full moon, every time the Padres win, whatever. The thing is, if one makes extra payments, then the mortgage will be paid off early.
And, since we’re on this topic, let me address the miracle software thing discussed on a nearby thread. Ahem… I’ll try to put on a straight face… OK, I give up… Bwahahahahhahaha…
But seriously now: how could anybody fall for that scam is beyond me. Do people really have no math skills whatsoever these days?
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