Do you REALLY need to paymortgage bi-weekly?

[ashedfc]

Time value of money makes today's money more expensive than future money. If you are paying today's dollar more towards your mortgage; you are loosing on the time value of money & the opportunity cost of money..
Just paying extra & reducing your amortization may not work out to be a good financial planning strategy, over the long run ((20, 30, 40yrs).

[tjthemanto]

I have a question about payments. I increased my mortgage payment twice so I could reduce the amortization period. I would like to put some money away for something, so I thought I could reduce my mortgage by the increases that I made for a short period of time. Is this something that is easily done with a phone call or is there a larger process to reverse the increases?

You can just do it over the Phone. As long as its not lower than what a normal bi-weekly payment is supposed to be , you won't have any issues.

[kanewtz]

I am on weekly accelerated payments for my mortgage, plus doubled it up every week. So in essence, I am paying 2 mortgage payments per week.

As far as I understand...Weekly payments take your Monthly payment and calculate like this (Monthly Payment*12/52).

Weekly accelerated works like this (Monthly Payment/4)...it just assumes 4 weeks per month.

So say your monly payment was $1000

Weekly = $1000*12/52 = $230.77
Weekly Accelerated = $1000/4 = $250

Someone correct me if I am wrong.

[matrix82]

We may look into a mortgage lender after this year. We are in a lease for a year starting July 1st. It was just so disappointing to get turned down considering we are paying down our school debt.

The suggestion for a part-time job is something I am considering once we move. I am thinking of seeing if I can work part-time at a call center. I am still waiting to hear back from the reserves, so if that works out it would give me some needed extra income to really pound down the debt. We live pretty frugally and the building we will be living in has a little higher rent, but has things like a fitness room so we won't need a gym membership etc.

[MortgageQueen]

I am on weekly accelerated payments for my mortgage, plus doubled it up every week. So in essence, I am paying 2 mortgage payments per week.

As far as I understand...Weekly payments take your Monthly payment and calculate like this (Monthly Payment*12/52).

Weekly accelerated works like this (Monthly Payment/4)...it just assumes 4 weeks per month.

So say your monly payment was $1000

Weekly = $1000*12/52 = $230.77
Weekly Accelerated = $1000/4 = $250

Someone correct me if I am wrong.

If your required monthly payment is $1000 monthly . . .then a "standard" weekly payment would be $250/week
1000/4= 250
If you were to accelerate, you would simply apply that same $250 to ALL 52 weeks. This would result in the equivelant of one EXTRA month's payment each year.
Standard weekly = $12,000 a yr.
Accelerated = $13,000 yr.

[ashedfc]

I agree with the calculation:
Normal monthly payment: 1000/month comes to 12000/yr whereas..
Accelerated biweekly payment: 500/biweekly (or 250/weekly) comes to 13000/yr at 500 times 26 or 250 times 52.

So by paying biweekly you are making 1000$ payment extra..

I would put this way: instead of paying 1000/yr extra towards your mortgage; buy 1000$ worth of Silver coin, in 25-30-40yrs time the Silver coins value will be a lot more, & you could sell the coins then & pay off your mortgage completely.. If not, the Silver coins can be a nice retirement savings for your old age. That's how wealth gets created.
Silver was $4 per ounce in 2000 & today is over $31, & there will be ups/downs but over time the price will be a lot lot higher (infact Silver price will increase much faster than your mortgage amount will decrease)..
Lot of rich people are rich because they follow a systematic strategy. This is not for everyone, but for those who can follow the strategy, it's an excellent way of wealth creation..

[MortgageQueen]

I agree with the calculation:
Normal monthly payment: 1000/month comes to 12000/yr whereas..
Accelerated biweekly payment: 500/biweekly (or 250/weekly) comes to 13000/yr at 500 times 26 or 250 times 52.

So by paying biweekly you are making 1000$ payment extra..

I would put this way: instead of paying 1000/yr extra towards your mortgage; buy 1000$ worth of Silver coin, in 25-30-40yrs time the Silver coins value will be a lot more, & you could sell the coins then & pay off your mortgage completely.. If not, the Silver coins can be a nice retirement savings for your old age. That's how wealth gets created.
Silver was $4 per ounce in 2000 & today is over $31, & there will be ups/downs but over time the price will be a lot lot higher (infact Silver price will increase much faster than your mortgage amount will decrease)..
Lot of rich people are rich because they follow a systematic strategy. This is not for everyone, but for those who can follow the strategy, it's an excellent way of wealth creation..

OK. . .question for you Ash. Does that work out if you calculate the interest paid over those several years (decades?) on the mortgage? I'm curious. I can see it would over the "last" decade as that was a significant jump. And are you suggesting silver because there's less "real" gold then there is on paper? . .or do you justthink silver is appreciating faster?

[kanewtz]

I agree with the calculation:
Normal monthly payment: 1000/month comes to 12000/yr whereas..
Accelerated biweekly payment: 500/biweekly (or 250/weekly) comes to 13000/yr at 500 times 26 or 250 times 52.

So by paying biweekly you are making 1000$ payment extra..

I would put this way: instead of paying 1000/yr extra towards your mortgage; buy 1000$ worth of Silver coin, in 25-30-40yrs time the Silver coins value will be a lot more, & you could sell the coins then & pay off your mortgage completely.. If not, the Silver coins can be a nice retirement savings for your old age. That's how wealth gets created.
Silver was $4 per ounce in 2000 & today is over $31, & there will be ups/downs but over time the price will be a lot lot higher (infact Silver price will increase much faster than your mortgage amount will decrease)..
Lot of rich people are rich because they follow a systematic strategy. This is not for everyone, but for those who can follow the strategy, it's an excellent way of wealth creation..

I do not plan on having a mortgage for 25 years. I want to be mortgage free by 2020 (Bought my house in 2010).

I am also interested to see in the interest over those years of a mortgage vs the "gains" in silver.

[marstec]

I do not plan on having a mortgage for 25 years. I want to be mortgage free by 2020 (Bought my house in 2010).

I am also interested to see in the interest over those years of a mortgage vs the "gains" in silver.

Matt,
If you are interested in paying off your mortgage early, then put extra payments down towards the principal early on in the mortgage rather than at the tail end. A huge chunk of your payments are going towards interest right now. The real estate market in my city has been crazy the past decade or so...the return on investment has been much greater than anything I've earned in my equities.

[ashedfc]

OK. . .question for you Ash. Does that work out if you calculate the interest paid over those several years (decades?) on the mortgage? I'm curious. I can see it would over the "last" decade as that was a significant jump. And are you suggesting silver because there's less "real" gold then there is on paper? . .or do you justthink silver is appreciating faster?

YES, for a longer duration (which a mortgage normally is) it works wonders.
Only problem is people do not adhere to the discipline of buying (every month/or every week/or every biweekly).. they always come up with an excuse that, so & so thing has happened & lets stop the purchase.

Why Silver? Because Silver is cheaper & affordable & the most undervalued metal on the planet, (it won't stay so for long). You can buy an ounce for very little money, so one can buy a Silver coin (almost every week/biweekly/whatever mortgage payment duration, instead of paying extra towards the mortgage). Gold is ideally the best, but it requires a lot of money to buy an ounce of Gold coin every week. Both are monetary metals.

I can only suggest what to do & what makes more sense to do? The calculation part & the other comparison, you have to do it yourself.
All you need to do is look at the cost of Silver over the total mortgage amortization period & calculate the numbers, by comparing the following..
1. Paying only mortgage monthly (& no other savings)..
2. Paying mortgage biweekly (& no other savings)..
3. Paying mortgage monthly & investing the difference into Silver..

The difference of option 1 & option 2 although seems very simple (one could do it from a calculator), it isn't so simple, because the interest rate difference during the entire mortgage amortization period.
Its the same for the difference in Option 2 & 3, because the interest rates are different, & so is the price of Silver over the entire mortgage amortization period..

[kanewtz]

Matt,
If you are interested in paying off your mortgage early, then put extra payments down towards the principal early on in the mortgage rather than at the tail end. A huge chunk of your payments are going towards interest right now. The real estate market in my city has been crazy the past decade or so...the return on investment has been much greater than anything I've earned in my equities.

I do...I put the maximum 10% of my original borrowed amount every year. I can only do it once though in my mortgage term without being penalized with fees. My mortgage term is in Nov.

So...in the meantime...I pay double my mortgage every month which that extra coverage goes straight to the principle.

There really isn't anything else I can do to pay it down quicker...unless I want to have penalities...or is there?

[MortgageQueen]

I do...I put the maximum 10% of my original borrowed amount every year. I can only do it once though in my mortgage term without being penalized with fees. My mortgage term is in Nov.

So...in the meantime...I pay double my mortgage every month which that extra coverage goes straight to the principle.

There really isn't anything else I can do to pay it down quicker...unless I want to have penalities...or is there?

No, there isn't more that you can do right now. When your mortgage term comes up tho, I can give you some suggestions that will open up your payment options more.

[kanewtz]

No, there isn't more that you can do right now. When your mortgage term comes up tho, I can give you some suggestions that will open up your payment options more.

Perfect...I hope by the time my mortgage is due (Nov 2015) I'll be able to pay most of it off when I renew. I say that now...but the wife wants a new truck and we are going to start a family soon...all these things will factor into this decision. Who knows. As long as I am good by 2020 I'll be happy!

[ashedfc]

As long as I am good by 2020 I'll be happy!

That's excellent..
But what happens after 2020, as "happiness is not a destination; rather its a process"

[MortgageQueen]

Here's a few tips from Canadians that have paid off their mortgage by 48.

Canadians who have already paid off their mortgage say they also made a number of sacrifices along the way. The poll found Canadians who have paid-off their mortgage did one or more of the following:

• 53 per cent said they skipped large, "unnecessary" purchases
• 53 per cent said they created a budget to track their spending
• 49 per cent cut down on extra spending, including restaurant and entertainment costs
• 38 per cent skipped vacations

With that in mind though, I still recommend talking to a financial planner. Often the money you are putting toward faster payment of mortgage may be more lucrative (i.e. tax shelters) being put in other areas.