Numerous companies frequently advertise that they can help you retire your home loan in a lot less time. These programs, which are known by several names, including "mortgage accelerator", state that they can cut almost 10 years from your thirty year schedule. All that is required to see the benefits of their program is to apply by paying a substantial fee. Is it worth the money?
These programs basically offer what is called a biweekly mortgage. The lender will charge you several hundred dollars to sign up for their program, along with a small fee every 14 days. By applying, you agree to let them take half of your house payment out of your checking or savings account every two weeks. The plans do work, but not because of any financial magic used by the companies that provide the programs. The plans work because you are making extra payments.
There are fifty-two weeks in a calendar year. By withdrawing half of your mortgage payment out of your bank account every fourteen days, you are making twenty-six half-payments, or thirteen full payments per year, rather than the twelve payments you were making previously. By making an extra payment every year, you are paying off your mortgage principal sooner and lowering the amount of interest that will be added to the outstanding balance. This will, over time, take several years off of the time it takes to pay off your home loan.
Are these systems worth your time? They could be, but only if you are rather lazy. It isn't essential to enroll in a system or pay upfront and pay regular fees to utilize this system of debt repayment. Most any mortgage company will permit you to pay extra money at any time. All you need to do is indicate that the extra money is to be applied to the mortgage principal. Many lenders provide a place on the form that you put in the mail or use on their Website for that very purpose. You may send in a bit of additional money each month, or you could send in one full extra payment each year. The net effect is about the same no matter what you do.
If you are interested in making additional payments towards retiring your mortgage early, all you need to do is contact your lender and ask what options might be available to you. You will likely learn that any one of a number of free opportunities are there.
©Copyright 2007 by Retro Marketing. Charles Essmeier is the owner of
Retro Marketing, a firm devoted to informational Websites, including HomeEquityHelp.net, a site about
home equity loans, mortgages and refinancing.
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