How Bi-Weekly Payments Can Pay Off Your Mortgage Faster

Biweekly (or fortnightly) payments seem to be the fad of the moment. Everyone's talking about how great they can be for paying your mortgage off faster. Some companies are even charging exorbitant fees to show you how good they can be for reducing your debt.

But do you know why they're such a good idea?

Did you know there's also a trap some banks can set for your bi-weekly payments that seriously STOP you from getting ahead?

We're going to look at some of the good and bad points of biweekly (fortnightly) repayments and how they really can help you save thousands of dollars.

How the BiWeekly Method Works

Before we start trying to alter payments or avoid bank traps, it's a good idea to understand how and why fortnightly payments work.

Let's look at a simple example:

If your mortgage payment was $1,000 per month - then you would pay 12 payments per year, which mortgage refinancing $12,000 per year. Easy, right?

Let's say you decided to pay half your mortgage payment ($500) twice a month, then you would pay 24 payments per year, which still adds up to $12,000 per year.

Okay - instead of opting to pay once a month or even twice a month, let's say you decided to pay half of your mortgage payment every second Thursday (or on the same day every second week), then by the end of the year you would have made 26 - not 24 - payments of $500 - which is $13,000 per year . That's one extra payment per year coming off the amount you owe on your mortgage.

No matter what loan amount, if you work out your repayments this way, it will always come out as one extra payment per year.

The reason this works is because not every month has exactly 28 days in it. Grab a calendar and count how many Thursdays you see. Most months will have four. Some months will have five Thursdays (usually two months every year). The same should work for any day of the week you choose.

Does it Work Every Time?

Let's look at an example mortgage. (We'll base this on $250,000 at 6.5% over 30 years). Our minimum repayment for this mortgage is $1,580.17 per month. Over 12 months, we would have paid $18,962.04.

Now let's cut the monthly figure in half. We will now pay $790.08 per fortnight (biweekly). If you pay the half monthly figure every second week for a year, you get: $790.08 x 26 fortnights = $20,542.08

(did you notice that it's still exactly one extra payment per year?
$20,542.08 - $18,962.04 = $1,580.17)

So - if I put this new repayment amount into our mortgage calculator, it tells me that I could pay my loan off in 24.2 years - that's almost 6 years off the loan term - and I could save $72,710 in interest, just by paying biweekly instead of monthly!

Every Cent Counts

Let's see what kind of difference rounding up our minimum fortnightly payment by a few cents can make.

Minimum fortnightly (biweekly) payment = $790.08

Let's round this figure up and pay an even $800 per fortnight. That's only $9.92 per fortnight extra. Everyone should be able to afford an extra $9.92 a fortnight - gee, that's only 0.70 cents per day!

Now we have the double benefit of paying biweekly payments, plus refinancing mortgage a few cents to the payment amount.

According to our mortgage calculator, your new loan term should be 23.4 years and you should have saved $81,200 in interest over the term of the loan.

Every cent really DOES help, doesn't it?

Lee Masterson is a freelance writer from South Australia and is one of the founders of MortgageLoanHints.com. She has worked in banking and finance for more than 10 years and now spends much of her time trying to help people control and manage their debt. You can find more of Lee's articles here: http://www.mortgageloanhints.com

Home Mortgage - Part 4

Obviously, you will not have this equity or the additional expenses if you decide to live in an apartment. And if you particularly dislike mowing and shoveling and such, an apartment gives you more relaxation time. Also, depending on your outside interests, you might find an apartment with pool facilities or a workout gym or tennis courts. Needless to say, if you are single, you will find more eligible bachelors and bachelorettes in an apartment complex then you will in a family neighborhood.

What this boils down to is that you must base your decision on whether to buy a house or rent an apartment on what you will feel comfortable with while fully realizing what the future might bring. However, this decision is not only for people starting out in life. It is important to read this section because we will be discussing the possibility of selling your present house and moving into an apartment in our section on saving money.

2nd Mortgage

Second mortgages can be a very bad trap for you. That is, you have been paying on your home mortgage for awhile and can now use the part of the house you have already paid for (your equity in it) as collateral on another mortgage. Therefore, you are right back where you started from. Unfortunately, it is the person who is deeply in debt already who is encouraged to get a 2nd mortgage. The idea is that this additional loan can be used for whatever you want and it is very tempting.

We continually see TV commercials for 2nd mortgages to pay mortgage refinancing your huge debts. Does it refinancing mortgage make sense to you to take on even more debt in order to pay off old debts? No, you know it does not.

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Get a Mortgage Pre-Approved Before Buying Your Next Home

Getting pre-approved for refinancing mortgage mortgage before buying is one of the most powerful things that I can recommend to anyone who's looking to purchase a home. It's also one of the most overlooked aspects of most transactions.

Becoming pre-approved for your mortgage before going into escrow can offer many advantages to homebuyers. First, studies conducted by the National Association of Realtors has shown that the greatest amount of stress that a buyer goes through occurs during the mortgage refinancing period between having their offer accepted on a home and the closing. Much of this is because of the uncertainties in the loan process. But by having the mortgage approved first, then finding the right home, buyers can take much of the stress out of the transaction.

Pre-approval of your mortgage also allows you enter the market with certainty. From the start you know what you can qualify for, and you won't waste any time looking at homes in the wrong price range. In addition, when you are pre-approved the lender will provide a certificate, or letter that will verify that you have already been approved for your loan up to a particular loan amount. You can then show this to home sellers to confirm your qualifications to buy their property. This allows you to distinguish your offer to purchase and will give you a strong position from which to negotiate price and terms. It can also give you a clear advantage if you're competing against other offers.

The pre-approval process is almost identical to the actual application process. The only difference is that there is not a specific property involved. The documentation needed from the applicant is very similar to what's needed for a normal loan approval. Most lenders take less than a week to have you approved and I know of some that are even faster than that.

Mike Sieber, President of Sieber Home Finance, Inc. in San Diego, CA. has been a leading mortgage professional since 1988. While many lenders have collapsed, Mike's firm has grown and thrived by offering clients solutions to buying homes effectively; using loan pre-approvals. To find out more about the power of pre-approval, contact Mike at http://www.SieberHomeFinance.com/preapproval or he can be reached at (858) 486-9797 or at msieber@cts.com

Refinance Your Home Mortgage Now to Stop Foreclosure

If you are facing foreclosure on your home, than a mortgage refinance may be the best thing you can do. Odds are, since you are reading this article, you are one of the hundreds of thousands of homeowners currently facing foreclosure, whether they know it or not. However, there is some great news. As this mortgage crisis escalates further, mortgage lenders and banks are feeling the pressure to do whatever they can to stop these foreclosures from happening.

Just a mortgage refinancing years ago, banks and mortgage lenders were only willing to work with homeowners to a certain extent. Now tough, with the banks struggling with the weight of the bad loans, they will be much more flexible and usually be willing to settle for less profits for smaller but guaranteed profits.

Refinancing a home mortgage is a great way to reduce your monthly mortgage payment by lowering the interest refinancing mortgage without losing your home to a foreclosure. Unfortunately, this works best if you have missed a payment or two or have been late a few times paying. This way the lender understands you are a potential foreclosure risk should you not be able to refinance. Your bank or mortgage lender will be willing to help you, especially if they understand the urgency of this and that it is the only way.

Be sure to call your bank or mortgage lender and speak with the person or department that makes these refinancing decisions. Explain your current situation to whomever you speak with. Explain to them refinancing your mortgage is the only way to avoid a foreclosure. This is sure to get their attention and they will start to work with you on the right refinancing plan for you.

You can not ignore the problem you are in. The good news is though that odds are you can prevent it from happening, as long as you make the right choice. Refinancing your mortgage the right way can save you thousands of dollars over the long run and may help you save your home from a foreclosure.

Home refinancing can save you thousands or if it is done the wrong way cost you thousands. Greedy mortgage lenders will try to suck you dry if you let them. Learn how to properly refinancing a home mortgage and walk away happy and with more money.

Important Tip For Starting the Loan Modification Process

If you are one of the many homeowners who purchased your home with an alternative or exotic type of loan program that provided you with a short-term fixed-rate mortgage, you will shortly be facing a potentially significant raise in your interest rate. You will be surprised to find your monthly payments increasing to a mortgage refinancing that is no longer feasible for you to manage. Home loan modification programs are designed specifically to assist in relieving you from an extreme and unexpected burden.

In one extreme case, a borrower completed their initial fixed period only to discover their rates had risen from $800 to almost $3000. Where $800 per refinancing mortgage is manageable to this family, they were not prepared for the significant rate change. The home had significantly changed its position in the market, so the only option the borrower had was to petition for loan modification from the bank.

Follow this basic tip and you can start your Loan Modification process with confidence:

Most importantly, you must create a hardship letter. The letter will need to describe your situation with detail to your hardship. Keep in mind that your lender will be busy with paperwork of many types, so be sure to keep your letter brief and descriptive.

The primary things for the letter should include the reasons why the adjusted rates are not feasible for you or what is occurring that prevents you from making your payments. One or two pages should be effective. Be sure to type whenever possible and check your work for errors since the easier the lender can read the document, the faster the process can move along.

Knowing what a lender will consider can direct the ingredients of your letter. Most lenders will consider loan modification for hardship cases that were unavoidable or natural causes. For example, a lender would have more room for modification in the case of a flood, medical emergency or job loss due to downsizing or company closure. Other situations that you may unfortunately be facing could be death of a family member, forced job relocation, or adjustable rate mortgage that has risen too high. There are many other cases that are acceptable and a conversation with a lender can give you an idea if your situation has loan modification potential.

Be sure to get your letter started as soon as you think there may be a problem. Usually, if a borrower thinks there could be a future problem, the problem already exists. Don't let yourself fall behind in payments because your credit score will drop and future potential purchases and refinancing will be increasingly difficult. Remember, the lender is going to be busy. Many times the loan modification process can take weeks to get started and the finish date can be 90 days or longer. For this reason it is important that you are well informed when you begin the process, there are many loan modification resources available to you.

To learn more about the home mortgage loan modification process, please visit Loan Modification - Save Your Home

80-10-10 Mortgage Loan Programs - How Do They Work?

An 80/10/10 mortgage loan program is a type piggy back loan that borrowers will sometimes use to avoid paying private mortgage insurance. The fees on this type of mortgage insurance can be as high as 1% of the total value of the property each year, mortgage refinancing borrowers are eager to avoid the expensive monthly payments if possible.

Most banks or lending institutions will insist that a borrower take out private mortgage insurance of they do not have a deposit equal to 20% of the home's appraised value. If you can deposit this much, you will not need the expensive insurance, and additionally, once your repayments have contributed 20% of the homes value then you will no longer need to continue paying for the insurance.

Many people will avoid this insurance obligation with an 80/ 10/ 10 mortgage loan program. In this type of mortgage program, the mortgage covers 80% of the appraised value, the borrower contributes 10% of the appraised value and the borrower also contributes an additional 10% of the appraised value through another loan taken out for that amount.

This second or piggy back loan will raise the down payment to an amount that will not necessitate the private mortgage insurance.

The second 10% on the house will not be protected by the homes value as collateral, and as a result you will pay a higher interest rate to secure this loan, as compensation for the mortgage refinancing increased risk. The loan can be offered by the same bank that is issuing the mortgage or can be issued through a different lending institution.

This has been considered a money saver, especially as loan payments are tax deductible but mortgage insurance payments were not. New legislation enacted this year has clouded the water slightly, and homeowners may be eligible to deduct their mortgage insurance payment as well, depending on their income and geographical area.

Borrowers are well advised to take the time and do a long term payment calculation comparison of the two options. The piggy back loan option is not always the cheaper way to go.

Some people who are seeking financing on very large and expensive houses will also seek out an 80/ 10/ 10 mortgage loan to avoid entering the considered Jumbo loan realm, and to avoid the higher interest payments associated with this type of loan. A loan of more than $300 000 is at risk of additional interest premiums. Speak with a financial advisor about the options available in your state.

For more on 80/10/10

Mortgage Loans and for other techniques to avoid PMI, visit the Mortgage Borrower's Guide at http://www.borrowersguide.com/

Mortgage Refinance Tips And Advice

For the average person who does not work in the mortgage industry, the mortgage jungle is very overwhelming. Mortgages are complicated! This article is a small collections mortgage refinancing tips and advice of what an average person should know when looking for a mortgage. We kept it simply, but informative.

Reverse Mortgage Funding

As we grow older, living expenses seem to increase drastically, it is for this reason a great number of elders choose to seek a reverse mortgage to provide help with these expenses. This option typically works well for those who have fully paid for their home, and have no mortgage upon it. Simply speaking, when you take advantage of a reverse mortgage you will receive a monthly stipend from the equity that your home carries. This is especially useful to the elderly, sometimes securing a reverse mortgage aides them with living expenses, that alone could help in allowing them to remain within their own home. It is wise to request to a mortgage broker that the cost of closing should be paid out of the money received from the reverse mortgage loan. Essentially meaning, no expenses directly out of pocket.

Mortgage Options - Interest Only

Interest only mortgages are specifically designed to substantially decrease your payment amount over the first years of the mortgage term. The way this program works is that for these first few years you are only making payments towards the interest of the mortgage. This keeps the mortgage payments lower than other mortgage options because you are not required to pay on the principal of the loan. Eventually the time will come that you will be required to pay both the interest and the principal. It is wise to fully investigate this mortgage option prior to choosing it. Very carefully make some calculations and determine rather or not you will be able to afford the payments once both interest and principal are required.

The Right Mortgage Broker for you.

With the vast refinancing mortgage of the internet, obtaining the proper mortgage broker has never been easier. Additionally the internet allows you to locate mortgage brokers from all over your area. You are not limited to using a local broker or company in any way. The mortgage brokers you can find on the internet are in great competition with each other. What does this mean for you? It is simple because they are so competitive, you will win with excellent program and competitive rates. To choose the proper mortgage broker for you, you first must be comfortable in choosing them. Choose a mortgage broker that gives you confidence in their guidance. Take your time in finding the perfect mortgage broker for you; make sure their goals and your goals match, thoroughly research all your options before making a choice.

Obtaining a Mortgage Loan the Fast way.

Obtaining a mortgage loan through the internet is easier than ever before. The benefit of an online mortgage broker is that generally, they have a wider spectrum of lenders and various programs that a typical mortgage broker might have. More often than not, they have the ability to process request more quickly, as well. Online mortgage brokers can even aid you if there is urgency because of a fast approaching closing date or you are in need of speedy refinancing. All of this is thanks to the technology of automated credit checks, verification of income and online loan applications. You can find mortgage brokers through various measures such as using a popular search engine like Google, simply type in mortgage broker and you will be amazed with the results. A better option is to search for reviews about the mortgage broker or seek the advice and referrals from your friends and family. The best mortgage broker will possess the seal of the Better Business Bureau.

Adjustable Rate Mortgage and What you should know about it.

If you opt for an adjustable rate mortgage ensure that you are fully aware of these facts , this will help you be ready when the time comes for your fixed rate mortgage ceases.

1) You should know when the first rate adjustment will occur and how much the adjustment will be. Knowing the specific date will prepare you for the event.

2) You should know that the adjustable mortgage rate fluctuates with the changes of interest rates. Find out what index your rate is associated with, so you can investigate the interest rates on your own.

3) Know all of your options when it comes to refinancing. If a adjustable rate mortgage proves to be unbeneficial for you, you have the option of refinancing with a fixed rate mortgage. To get a good interest rate on a fixed mortgage you should watch the rates closely and if you choose to refinance, do so when the rates are comfortable to you.

Obtaining Flexible Interest Only Mortgages

For those that practice self-discipline, a flexible interest only may be practical. This option provides a payment arrangement that is flexible in regards to the payments that you make. This does not mean they are flexible on the timely manner in which you pay them, this simply means when your payment date arrives you are required to make a minimum payment of at least an amount towards the interest on the loan. However, with this flexible option you can opt to pay an additional amount towards the principle of your mortgage. Generally, your flexible interest only coupon book will include an area that determines the amount needed to be applied towards the principle if you should choose to do so. This is where that self-discipline comes in handy, it is wise to apply as much as possible towards the principle, bringing the amount down and coming that much closer to paying off your mortgage.

Cyrus Zahabian is one of the editors of Lendgo.com. Lendgo is a website dedicated to consumer personal finance, mortgages, and credit cards. Find the a low rate mortgage refinance loan and save thousands. Read our credit card reviews and apply for the one right for you. Get a free credit report instantly online. Fix your credit with affordable and effective legal credit repair.

Loan Modification - Stop Foreclosure

Foreclosures are at an all time high and the feds who helped create the problem still have no solution. Private enterprise has a solution in the form of Loan Modifications. I work with a company who has been successful in convincing lenders to drop interest rates, decrease principals, and change terms for home owners.

Are your mortgage payments too high?

Any of these sound like your situation?

Has your mortgage payment adjusted with no end in sight?

Has the value of your house dropped?

Are you depleting your 401k or your retirement account in order to make ends meet?

Are you living off of credit?

Have you experienced a job-loss?

Are you in a negative amortization mortgage with your balance increasing to no end?

Have you experienced a change in job or income?

Are you worried about losing your home?

LoMo Means Financial Control LoMo is short for Loan Modification. It's is a process whereby a homeowner's mortgage is modified and both lender and homeowner are bound by new, negotiated terms. The most common loan modifications are:

Lowered Interest Rate

Reduced mortgage refinancing Balance

'Fixing' Adjustable Interest Rates

Increased Length of Loan Term

Forgiveness of Payment Defaults & Fees refinancing mortgage any combination of these!

A loan modification is NOT a refinance. With a loan modification you do not need go through the costly steps that are required for a refinance. You do NOT need an appraisal, title or a credit check.

LoMo qualifications

If you are a homeowner who has experienced financial difficulties, you can qualify for a home loan modification.

Decrease in home value

Divorce/Separation

Loss/Reduction of Income

Illness

Job Relocation

Failed Business

Military Service

Other hardships

The bottom line: You will save money!

We may be able to help you reduce your house payments, just by negotiating your loan terms with your lender. Keep your house and reduce your payments!

Clem has a business background of 40 years. He now offers financial services such as mortgages, life insurance, financial needs analysis, long term health care plans, loan modifications, and investments for area clients. He also completed tax preparer training with H&R Block and is doing taxes for East Tennessee residents. More information is available at his website http://www.mtnfinancialservices.com

Who Qualifies For Obama's Home Loan Modification Plan?

Obama's home loan modification plan is officially known as refinancing mortgage Making Home Affordable (MHA) plan. The plan is expected to reach up to 9 million families, so that they can refinance refinancing mortgage modify their loans and hold on to their houses during this economic recession. Even if you think you won't qualify, think again. Learning about the requirements for modifying your home loan might surprise you.

The first criteria for modification is that your loan has to be a Fannie Mae or Freddie Mac insured loan. At the present time, only loans by those two organizations are eligible for special refinancing and modifying actions under the MHA plan. You also must be the primary resident of the house in question if you want to refinance or modify your home loan under the plan.

The MHA plan gives homeowners tow separate options. The first avenue is refinancing; the second is modifying their loan. Borrowers who have not yet fallen behind on mortgage payments and owe below 105% of the principal of their loan can take advantages of a special refinance. This is true even if they don't qualify for traditional refinance. It's important to know that only those who are still current on payments can refinance under the MHA act.

If you're having difficulty making ends meet and paying your monthly mortgage premiums, then getting a loan modification with the government-sponsored MHA plan could be for you. People who are current as well as people who have fallen behind on mortgage payments can get loan modifications. As long as you own and occupy the house and have a monthly payment that exceeds 31% of your gross monthly income.

The loan modification plan target at-risk borrowers and adjusts the terms of their mortgages so they will pay below 31% of their gross monthly income. This is called their debt-to-income (DTI) ratio. The first step is for lenders to reduce the interest rate to a floor of 2% to try to meet a 38% DTI. If the interest rates hit the floor and still do not meet the 38% DTI, then further modifications can be made. The lender can extend the loan for up to 40 years, and then they can begin to forbear principal on the loan. After meeting the 38% DTI, lenders and the Treasury will work together in a dollar-per-dollar matching program to bring the rate down to below 31% DTI for borrowers.

After coming to an acceptable modification, borrowers will have three months to prove that the new loan rates are something they can handle. If they keep current for a trial period of three months, the new mortgage terms stay fixed for the next five years. This is the procedure that the MHA plan uses to prevent foreclosures and let millions of U.S. families remain in their houses.

For additional information about home loan modifications, please visit the #1 loan modification resource on the net: http://Home-Loan-Modifications.info

Reverse Mortgage Myths and Misconceptions

Many senior homeowners, age 62 or older, are facing a distressing dilemma. They do not have enough money to meet their monthly living expenses, yet they have significant equity in their homes. Many of refinancing mortgage homeowners actually own their property outright. The most apparent solution to this problem is for the homeowner to secure a Reverse Mortgage, which allows them to access the equity in their homes to fund those living expenses. Yet, many Seniors are reluctant to pursue this strategy? Why is this?

The reality is that the Reverse Mortgage program has many myths and misconceptions associated with it. This article will address the most common of these myths and fully explain the benefits and ramifications of a Reverse Mortgage.

First, many believe that once they secure a Reverse Mortgage, they give up title to their home. This is not true at all; the homeowners retain title to their home, in their name. The only thing that changes is that they now have a mortgage. This difference with a Reverse Mortgage is that there is no repayment required until one of three life-changing events occurs in the homeowner's life. These three events are: The homeowner, or the homeowner and their spouse both pass away; the homeowner moves out of the property permanently (typically, for more than 12 months), or the property is sold. In the case of the homeowner(s) passing away, those that handle the decedent's estate simply sell the home as normal, and in that process refinancing mortgage the balance of the mortgage.

Second, many believe that they will eventually owe more than their home is worth if they secure a Reverse Mortgage. This is not the case at all. The Reverse Mortgage program has a built in feature that prevents the mortgage balance owed from ever being more than the value of the home, even after normal selling expenses are incurred. This feature is a form of Mortgage Insurance, and is backed by the Department of Housing an Urban Development's (HUD) Reverse Mortgage program. In reality, a senior homeowner age 70 will only be able to access approximately 60% of the equity in their homes through a Reverse Mortgage, insuring that even with the mortgage interest that accrues on the loan balance, they will never owe more than the home is worth. In the most extreme circumstance, one where real estate prices drop dramatically, and the value of the home were to decline, this insurance would protect the homeowner or their heirs from any shortfall when paying off the balance.

Third, many homeowners believe that the cost of securing a Reverse Mortgage outweighs the benefits it can provide. The reality is that the costs associated with a Reverse Mortgage are higher than conventional financing, equal to about 2% of the appraised value of the home, or the FHA maximum loan limit in effect in that area (whichever is lower), plus normal processing and closing fees that vary from state to state. However, if you consider the impact that a Reverse Mortgage can have on the homeowner's quality of life or the security that having access to their home's equity can provide, and if you think about spreading the initial cost over the remaining years of the homeowner's life, it is not a great amount. It is true however that if the homeowner has plans on selling the property within a few years of obtaining their Reverse Mortgage, then it may not make sense.

Finally, many Senior homeowners do not think they have the ability to qualify for this program. Nothing can be farther from the truth. There only two basic qualifications for securing a Reverse Mortgage. First, all owners must be 62 years of age or older. Second, they must reside in the property as their primary residence. That is all. There are no income requirements. There is no minimum credit or credit score requirements. There are no maximum age requirements. You simply must be 62 years of age or older and occupy the property as your primary residence. That's it. Simple.

Hopefully this clears up many of the myths and misconceptions associated with this life-changing program. The popularity of the Reverse Mortgage program continues to increase year by year as homeowner's live longer.

Brent Burns is a Mortgage Planner in Crystal Lake, Illinois, in the northwest suburbs of Chicago. He has been designated a Certified Residential Mortgage Specialist (CRMS) by the National Association of Mortgage Brokers and a Certified Reverse Mortgage Counselor by the Senior Lending Network. You can find out more about Brent and his Mortgage Planning Team at his website, http://www.McHenryCountyHomeLoans.com Brent specializes in providing Senior Homeowners with equity extraction solutions that secure their income, improve their lifestyle, and balance their financial future. You can contact Brent directly at 815.477.5545