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I have talked about most common types of mortgages, as well as compared the traditional 30 year fixed rate mortgage with the 15 year one. However, I haven’t spent any time discussing the Biweekly Mortgage, which seems to be an upcoming trend. This type of mortgage combines the main advantages of both, the 30 year fixed rate and the 15 year fixed rate mortgage.
So, the biweekly mortgage is a fixed rate mortgage, which makes is a comparable to the 30 and the 15 year mortgage.
It is amortized over 30 years, but the payments are made biweekly (hence the name). So, you would pay half your mortgage amount per pay period. What happens is, you make 26 mortgage payments a year, which equals one additional monthly mortgage payment per year. This additional monthly payment per year significantly reduces the principal amount as well as shortens the duration of the mortgage to an average 19 – 21 years. This 11 or 9 year difference will mean big savings in the amount of interest paid as well.
Consumer Reports analyzed various types of mortgages, and according to the results, a $100,000 biweekly mortgage at 8% interest rate can save you $34,000 in interest when compared with the traditional 30 year fixed rate.
Nowadays, most people get their paychecks electronically deposited right into their accounts, so this biweekly mortgage is highly compatible with most paychecks. Just set up an automatic allotment or payment for your mortgage each paycheck. However, if you can’t maintain a steady checking/savings balance for whatever reason; this option may not be the right one for you.
Otherwise, I think if you’re considering purchasing a home, this might be something worth thinking about. If you can save $34,000 on a $100,000 mortgage, savings are even more substantial for larger mortgages. That is a lot of money and you build up equity quicker than with a traditional 30 year mortgage, so you end up truly owning your house about 10 years sooner.
If I were buying a home like I originally intended to, but I won’t because the California housing market sucks, I’d say – SIGN ME UP!
Tags: biweekly mortgage
I already blogged about some of the most common types of mortgages out there, but I would like to spend some time comparing the two most common ones: the 15 Year Fixed Rate Mortgage versus 30 Year Fixed Rate Mortgage. Though most people go for the 30 Year Mortgage, mainly so they can afford [Read More...]
April 30th, 2010, which was the deadline for purchasing a home to be eligible for the $8000 tax credit, is gone. But, the First Time Homebuyers Credit remains in effect and some of us can still take advantage of it.
I had a feeling that some type of extension of the First Time Homebuyers Credit [Read More...]
We recently got orders for our next tour and it is going to be Alameda, California. Both, my husband and I were very excited initially, because that’s not too far from where we met and we loved the area. Of course, that was eight years ago and just from doing a little research about our [Read More...]
Yesterday, on April 5th, 2010 another piece of legislature has been put into effect, (although some mortgage servicers have already initiated it under certain conditions) to help those homeowners who are faced with foreclosure on their property. It is called Home Affordable Foreclosure Alternatives or HAFA.
[Read More...]
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The Making Homes Affordable Program is another strategy by which our current administration is making efforts to help those who suffered during the mortgage crisis, and therefore get the economy back on track.
Currently, this program offers two solutions for those who qualify, though because it is a fairly new initiative, additions and modification are in the works. Read the rest of this article at [Read More...]
As the economy slowly recovers, everybody is looking to save money any way that they can. As for homeowners, that may mean cutting the middle man – the real estate agent – out of the process of selling their home.
Initially, it makes perfect sense. The real estate agent’s commission is 6%, so for a [Read More...]
Initially, the HAP was enacted back in February of 2009 with a budget of $555 million. In September of 2009, the original version was revised and expanded, so as of now, the HAP applies to:
1) Wounded, injured, and ill members of the Armed Forces with 30% or greater disability who have to relocate in order to get medical treatment or who are retiring as a result of their injury. This also includes Department of Defense and Coast Guard civilian homeowners.
2) Surviving spouses….
Read More at [Read More...]
As for the HUD homes out there, from what I’ve seen, there are some beautiful ones out there, but if you’re interested in one, don’t get your heart set on it until you know the results of the home inspection. If you are an investor with some cash on your hands to do some updating, then a HUD home can be a golden opportunity for you as long as you are diligent in finding out the problems and fixing them up to increase the re-sale value.
Read more at [Read More...]
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