Atlanta Mortgage News

How Profitable is it to Split your Monthly Mortgage into Two Payments?

April 24th, 2018 8:05 AM by Elizabeth Washburn

Did You Know? 

Making one extra principle and interest payment a year will knock about 7 years off your mortgage and save you thousands of dollars.

Beware of Mortgage Reduction Services/ Savings Program Scams

"Bi-Weekly" mortgage payment programs  charge fees and do for you what you can easily manage. They say they save you an impressive amount of money on your mortgage and reduce the number of years you pay on your mortgage. 

This is true, but you  don't NEED them to get those savings, and by doing it yourself, you save even more money!

This is how they typically work: The company places your 1/2 mortgage payment in their account every two weeks, then they hold the payment until all of the mortgage payment is collected.  During the course of a year 26 deductions will be made from your account. With the extra 2 deductions, the "Service" makes one additional mortgage payment every year. In other words rather than making 12 mortgage payments, 13 payments are made.

The enticement is that they are providing a special service when you don't have the time or discipline to make it happen.

The real story is that there is an easier way to do this - with no payment shock- and your mortgage company will immediately credit the payment to your account. Just deduct your mortgage payment automatically from your account each month with an additional 1/12 of your principle and interest payment applied to the principal balance each month. (Extra money is automatically applied to principle unless you tell your mortgage company to do something else with it.)

          New Monthly Payment = Monthly Payment  + (Principle & Interest /12) . 

At the end of 12 months, you will have made an additional mortgage payment and you won't pay any fees to a servicer nor will you have had your money held in limbo. Now that just makes cents!

Remember me when you are talking homes!

I'm passionate about helping people achieve their home dreams

with the best possible financial options. 

Posted by Elizabeth Washburn on April 24th, 2018 8:05 AM

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