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#134225 - 21/02/08 06:09 AM
Bi-Weekly House Payment Program
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Member
Registered: 11/01/03
Posts: 3505
Loc: San Antonio,Texas
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Who is Paying their House with this Program ?....Just got a new House, and the Lender has this "Equity Acceleration Program" where you have a choice to Pay Weekly, Bi-Weekly or Monthly...Thinking about Paying Bi-Weekly !!!
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#134226 - 21/02/08 06:14 AM
Re: Bi-Weekly House Payment Program
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Anonymous
Unregistered
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Originally posted by Rickster43: Who is Paying their House with this Program ?....Just got a new House, and the Lender has this "Equity Acceleration Program" where you have a choice to Pay Weekly, Bi-Weekly Monthly...Thinking about Paying Bi-Weekly !!! I think its a good idea if you're looking to own your home outright. Another thing I'd consider though is making 1 extra payment a year if you're into "equity acceleration."
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#134228 - 21/02/08 06:38 AM
Re: Bi-Weekly House Payment Program
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Member
Registered: 30/04/03
Posts: 757
Loc: Omaha, Nebraska
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Read this... http://www.mtgprofessor.com/A%20-%20Biweekly%20Mortgages/Biweekly%20versus%20payment%20increase.htm You'd actually be better off simply paying 1/12 of a payment extra each month. Overall these acceleration programs are good. They will increase your equity, and save you a significant chunk of money. Prepaying yourself is better, you avoid any enrollment fees or monthly fees they might come with, as well as paying down your principle faster. You will save a few thousand dollars doing it yourself over the course of the loan.
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#134229 - 21/02/08 06:44 AM
Re: Bi-Weekly House Payment Program
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Anonymous
Unregistered
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Originally posted by Coop: Read this... http://www.mtgprofessor.com/A%20-%20Biweekly%20Mortgages/Biweekly%20versus% 20payment%20increase.htm
You'd actually be better off simply paying 1/12 of a payment extra each month.
Overall these acceleration programs are good. They will increase your equity, and save you a significant chunk of money. Prepaying yourself is better, you avoid any enrollment fees or monthly fees they might come with, as well as paying down your principle faster. You will save a few thousand dollars doing it yourself over the course of the loan.But that only gives you 1 full payment every year. I think if you go with the bi-weekly deal, you pay 2 extra payments per year. I think it makes sense if you get paid every 2 weeks. My mortgage is so small tho that I pay double payments every month, so I'll have my 30 year mortgage taken out last year paid off in another 8 years or so.
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#134230 - 21/02/08 07:56 AM
Re: Bi-Weekly House Payment Program
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Anonymous
Unregistered
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But that only gives you 1 full payment every year. I think if you go with the bi-weekly deal, you pay 2 extra payments per year.[/QB] You do make two extra payments per year, but you only make one extra full payment per year. When you pay bi-weekly, you are actually paying 1/2 of a monthly payment every two weeks. So if your mortgage is $1000 per month, you pay $500 every two weeks. But how the calendar works out, you will have two months out of every year where three payments (of $500) will fall in the same month. So 2 x $500 = $1000 or one full monthly payment. Regardless, its a good deal to do, especially if you are not disciplined enough to tuck extra money back every month to apply toward the principal. I think the program shaves off about 7 years from a 30-year mortgage.
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#134231 - 21/02/08 08:49 AM
Re: Bi-Weekly House Payment Program
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Member
Registered: 30/04/03
Posts: 757
Loc: Omaha, Nebraska
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Originally posted by RiNkY: Originally posted by Coop: [b]Read this... http://www.mtgprofessor.com/A%20-%20Biwe...%20increase.htm You'd actually be better off simply paying 1/12 of a payment extra each month. Overall these acceleration programs are good. They will increase your equity, and save you a significant chunk of money. Prepaying yourself is better, you avoid any enrollment fees or monthly fees they might come with, as well as paying down your principle faster. You will save a few thousand dollars doing it yourself over the course of the loan. But that only gives you 1 full payment every year. I think if you go with the bi-weekly deal, you pay 2 extra payments per year.
I think it makes sense if you get paid every 2 weeks. My mortgage is so small tho that I pay double payments every month, so I'll have my 30 year mortgage taken out last year paid off in another 8 years or so.[/b]It's the same amount extra every year... I think the difference is with the equity accelerator the extra payment isn't applied until the end of the year. If you do it yourself, the extra 1/12 payment is immediately applied to the principle. In the example from the web site I linked, it works out to a difference of about 3 payments.
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#134234 - 21/02/08 10:45 AM
Re: Bi-Weekly House Payment Program
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Anonymous
Unregistered
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Originally posted by jorge: I thought of this also, but figure it's better to put this extra money into a 401k.
The reason is this, my mortgage is at 5%, while my 401k averages 12-20% a year.
Meaning, that I will make more money on the 401k over time than save on interest on the mortgage, by far too. Not true really - because your monthly mortgage payment is like 95% interest and only 5% principle. With most mortgages anyway. So the sooner you pay down more principle - the more you save on interest.
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#134235 - 21/02/08 11:39 AM
Re: Bi-Weekly House Payment Program
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Member
Registered: 17/04/03
Posts: 347
Loc: Illinois
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Mortgage interest is also tax deductable. I also prefer to keep my money and use it for investing but I can see both sides.
As long as everyone pays their damn bills, it's all good by me.
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#134237 - 22/02/08 05:12 AM
Re: Bi-Weekly House Payment Program
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Member
Registered: 27/11/00
Posts: 1147
Loc: Montclair, NJ
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Originally posted by RiNkY: Not true really - because your monthly mortgage payment is like 95% interest and only 5% principle. With most mortgages anyway. So the sooner you pay down more principle - the more you save on interest. Think of this way. Lets say I a 5% mortage,and a 20% return on my 401k and for arguments sake it's compounded yearly. If I use $1000 towards my 401k, in one year, this $1000 is now $1200. While the $1000 I still own on my mortage is now $1050. So, that $50 is tax deductable, vs the $200 net from the 401k which isnt'. So, if I remove a 1/3rd, 401k nets me $133 Mortage saves me $50. Logically I'd put it towards my 401k. And remember that 401k will keep on netting me money until way after the house is paid off. That being said, If you have extra cash it's best to put it towards other loans first, since they have a higher APR. And as you mentioned, the interest is tax deductible on your mortgage. It is rarely smarter to put pay off a mortgage faster if you have other debt. And if you don't have other debt, it's sometimes more logical to invest that.
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#134238 - 22/02/08 07:43 AM
Re: Bi-Weekly House Payment Program
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Anonymous
Unregistered
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My 401K is already maxed out each year. :rolleyes:
I toss in an extra $460 a month into my mortage to pay it off at a 15 year rate rather than a 30 year one. That's going to save me about $100,000 in loan fees but more important for me - it's going to feel good owning (well sort of) my house outright. I've been in my home for 6 years and have paid the debt down 50%.
Most people don't have the disipline to maintain a 401K until they reach a certain larger income. The marginal propensity to save IIRC. If you can scratch together an extra $50-$100 pay off those stupid live energy sucking credit cards!
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#134239 - 22/02/08 08:03 AM
Re: Bi-Weekly House Payment Program
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Anonymous
Unregistered
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Only started my 401k last year at age 32. Probably left it a little late really - employer match 50%. I now look back on all the $ I have lost out on. Maxing mine to the limit my employer will match now and still putting in the double house payments. So in 6 or 7 years I should be sitting quite nicely - before I'm 40.
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#134240 - 22/02/08 11:12 AM
Re: Bi-Weekly House Payment Program
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Member
Registered: 01/10/01
Posts: 3153
Loc: NoVA
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Originally posted by RiNkY: Only started my 401k last year at age 32. Probably left it a little late really - employer match 50%. I now look back on all the $ I have lost out on. See if your program has a "catch up" provision. It can let you contribute more then the IRS max of $15K a year....
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#134241 - 22/02/08 02:47 PM
Re: Bi-Weekly House Payment Program
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Anonymous
Unregistered
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Originally posted by DocNo: Originally posted by RiNkY: [b]Only started my 401k last year at age 32. Probably left it a little late really - employer match 50%. I now look back on all the $ I have lost out on. See if your program has a "catch up" provision. It can let you contribute more then the IRS max of $15K a year....[/b]I think you have to be age 50 or older for that.
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