Q: I've been paying my mortgage every two weeks, but times are tight
financially. Does this help me or the mortgage company in the long run?
A: By paying your mortgage every two weeks, you have made a great
investment in your home and credit score. This strategy adds one
payment more per year, which doesn't seem like a lot, but the savings
are substantial over the long haul. Sending money every two weeks pays
off your mortgage in 23 years instead of 30. Also, by setting up
electronic payments from your account to your mortgage holder, you can
reduce mail delays and attack your principal balance a few days sooner.
But all mortgages don't work the same. If you have an adjustable
loan, don't just pay the minimum amount. Some loans have a negative
amortization feature that lets you pay less than the standard payment
and then your principle increases. You end up owing more each month
instead of less!
So check the payment coupon carefully. Make sure you pay at least
the payment, which fully amortizes the loan. Check out the mortgage
calculator at business.com or mortgagefreesocal.com.
I know these are hard economic times, but this is "home
economics;" your home is an investment for the long term. You might
need to downsize your spending plan. Track your spending and make some
layoffs. Your goal is not to run your home like a non-profit. You are
the CEO of your financial future, and if you keep paying your house
payments bi-weekly, it will be a profitable move.
--Gail Perry-Mason
Leave a comment