Before
getting your home ready for selling, always consult a REALTOR®. Each
property is different and the following story should be used as a guideline
to get you ready for prepping your
property.
You may have heard
people, especially mortgage lenders, extolling the virtues of biweekly
payments, saying that you
can save thousands of dollars and take 5 to 7 years off your
mortgage--and then offering to set up a biweekly plan for
you for as little as $400. But you don't have to spend $400
to begin saving money and time on your mortgage. In fact,
you don't have to spend anything at all! You can set up a
money-saving mortgage payment plan yourself--easily and at
no extra cost.
The key is to look carefully at the fine print in many
biweekly plans. You find that even though you'd be making
biweekly payments, the lender may only post them to your
account on a monthly basis, which means that you wouldn't be
saving anything on interest, because mortgage interest is
paid in arrears (as opposed to rent payments, which are paid
in advance). Your only real savings would be in the fact
that you'd be making the equivalent of one extra payment a
year. That1s a good thing, of course, but you don't need to
pay someone $400-500, possible monthly maintenance fees, to
be able to accomplish the same results.
Here's how biweekly payments save time and money: By making
biweekly payments, you actually end up making an extra
monthly payment each year. Over the course of a year, you'd
make 26 payments (one every other week for 52 weeks), which
is the same as making 13 monthly payments. Making one extra
payment per year will shorten the life of your loan and save
you thousands of dollars.
But you don't have to make biweekly payments to obtain those
savings. Here are a couple examples of how you can save big
money, using the same basic idea:
If you get paid every two weeks, divide your monthly
principal and interest payment in half and then send your
lender a check for that amount during those months in which
you receive three paychecks. Just sending in those two extra
checks will be the equivalent of one extra payment a year.
If you don't want to send lump checks, you can get the same
results by dividing your monthly principal and interest
payment by twelve and then adding that extra amount to your
payment every month. Normally, that figure won't put too
much extra strain on your budget, and it will add an extra
mortgage payment to your loan every year.
You really can save significant amounts of money and shorten
the life of your loan by making extra payments, but you
definitely don't have to pay a lender $400-500 to do it.
Making those extra payments is easy to do yourself, and at
no extra charge--which is always a good thing.
