Then you would be in a pickle, behind in regular payments, and your credit report would reflect the same
Is there any link to calculator for one time payments once a year. Then it would be east to compare with extra payments made every month
Great article. By putting something towards the principal and paying bi-weekly saves you a lot of interest payments already. Majority of people dont know that they are racking interest on their mortgage everyday, and by paying it on the 1st and 15th day, you can knock half those interest each month and saves you from interest payments in the long run. Also, make sure you pay your principal within 1st of the month and tell the mortgage company that its for principal only. Some banks or loan companies will just add it to your next mortgage payment and penalized you for paying extra each month.
You can program in the loan and track your extra payments
If you do biweekly payments through your lender, just make sure they don’t charge you for it. If they do it’s not worth it. You can accomplish the same result by simply making an extra payment per year, which is what biweekly payments accomplish.
David Mason commented about keeping the lender honest by tracking the payments. Never a bad idea, plus it’s just good to keep track of your progress on your own anyway. One of the best ways to do this is to use Quicken. The software will track the progress of the payoff of your loan.
Ah, yes, the fees of a bi-weekly program. I personally don’t like being locked into something that aggressive. The extra amount I pay per month is consistently increasingly, slowly. But then again, if I do have extra money then it goes to the mortgage as well. Current goal is to make 1 or 2 extra payments a year. Every little bit helps. My overall goal is to pay this puppy off in 15yrs or before my son graduates high school, whichever comes first.
my interest is 650..principle is 235..so i automaticly set up to take out and extra 250…in 3 years i will bump that up to 350
I have a question on paying the motgage off early. Someone told me that to pay the monthly payment and pay 3 months of principal payment to the mortgage from amortization schedule will reduce interest payment also I will not have to make 3 months payments. Is that true? Thanks.
I just wanted to thank you for this article. I had a discussion at work about the advantages and disadvantages of a 15yr mortgage and 30yr mortgage. Also the payment plans that I would like to pursue once I’m locked into that particular loan. I’ve come to the conclusion before even coming to this site that we would contribute half or all of our tax refund towards the loan of the house.
For Wijahat– Making three payments of principal with your house payment only takes it the principal amount of money due at the end of the loan. It does NOT cancel three months of house payments. If you try to do that, you will be three months behind in your regular monthly payments, as your loan is set up for monthly payments, regardless of the balance due. So, yes, make those extra three payments toward your mortgage as it will show up in the end pay-off and savings in interest.
We had Citimortgage, who would not accept anything but full mortgage payments…so we couldn’t do a bi-weekly plan (paying a whole extra payment a year), unless we wanted to pay Citi $400 for it. Forget that! So, every time we made a 1/2 payment of $500, they would apply it to principle and say we hadn’t paid our payment. I had to call every month to have them combine the 2 payments. After about 6 months of that, we decided to take that $1000 extra yearly payment and divide it out over 12 months. Now we still pay 2 payments a month, but one is the full payment ($1000) and the other is the installment loans IN little bit extra (1000 / 12 = $). The automatically gets applied to principle, and I don’t have to call them every month! Just a suggestion for everyone who thinks paying $400 for a bi-weekly plan is ridiculous.
