A Mortgage and Bank Trick You Should Avoid at All Costs
Once you've purchased your home, you will begin to get correspondence from your lender about a "Mortgage Reduction Program," in which you can cut years off your mortgage, without adding money to your payment. This is another trick bankers have to get you to give them your payment sooner, so they can hold it in escrow and make more money off of you.
The program arranges for you to make your mortgage payment bi-weekly. In other words, you cut your monthly payment in half and make it every two weeks. Basically, all the bank is doing is collecting an extra mortgage payment, over the course of a year and adding it to your principal loan amount. This cuts five to seven years off your 30-year mortgage term. Here's the secret they don't want you to know.
First, you can do this without them. Simply add to your principal loan amount on any given month, when you can afford to do so. You'll learn more about this, in the section on ARMs. Second, the banks charge you a hefty setup fee, usually $250 to $350, as well as a monthly processing fee. You don't need to pay this, ever! Again, you simply add money to the principal loan, in the same check you use to pay your monthly mortgage. In fact, your mortgage invoice provides a box that specifically says, "Additional Principal." If you want to cut seven, 10 or even 15 years off your loan, just ask your mortgage professional how much you need to add each month or each year to meet that term.
The most exciting part of this plan, though, is not the years you cut from the term as much as it is the tens of thousands of dollars in interest you save. For example, on a $150,000 loan, if you add just one extra payment each year to the principal loan amount, you'll save well over $60,000, if you keep your mortgage for its entire term. And, if you set it up through payroll deduction at your workplace, you won't even notice the money is gone. This is a very powerful program and a great way to beat the bankers at their own game.
If you are interested in learning more about how much interest you can save by adding to the principal loan amount, go to a mortgage calculator site on the Internet, and ask the computer to do it for you. The best web site I have seen for this is Karl Jeacle's Mortgage Calculator. You can locate it on the Internet by simply doing a keyword search for mortgage calculator. Check it out, and you can beat the bankers at their own game.
Mark Barnes is the author of the new novel, The League, the first work of fiction, based on fantasy football. He is also an investment real estate and home loan finance expert. Learn more about his suspense thriller at http://www.sportsnovels.com Get his free mortgage finance course at http://www.winningthemortgagegame.com
Latest News
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 Sify | Mortgage Refinance Applications Soar As Rates Fall EasyBourse.com, France - The Mortgage Bankers Association's index of refinance applications posted a record 203.3% increase over the previous week. Additionally, the US Treasury ... Fed will buy $500 billion in securitized home loans Mortgage rates fall, but many borrowers will have trouble qualifying US move cuts mortgages to lowest rate since February |
 Yahoo | US MBA’s Mortgage Applications More Than Doubled Last Week Bloomberg - The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan jumped 112 percent to 857.7, the highest level since March, ... FINANCIAL STOCKS Bulls outlast bears in Wednesday grudge match Mortgage Apps On Rise As Rates Drop UPDATE 1-US mortgage applications post largest gain ever |
VA Specialty Lender Offers 100% Mortgage Refinancing PR Web (press release), WA - Salt Lake City, Utah (PRWEB) December 3, 2008 -- iFreedom Direct Corporation, a Salt Lake based mortgage company, is now offering 100% VA refinance "cash ... |
 CBC.ca | Bernanke Says US Must Step Up Foreclosure Efforts (Update1) Bloomberg - ... been prodding private mortgage servicers and bond investors to cooperate with government efforts to modify or refinance loans for troubled borrowers. ... Bernanke: More foreclosure help needed Op-Ed: Fed Throws Refinancing Party; No One Shows Up BOND REPORT |
Lower mortgage rates help but jobs, prices key Reuters - Applications to buy and refinance homes hurtled higher last week as the lowest rates since the summer of 2005 unleashed pent-up demand. ... |
Carmen: Time Is Right to Refinance Your Mortgage CNBC, Englewood Cliffs - Despite the doom and gloom in the economy, there's actually a glimmer of hope shining through for homeowners looking to refinance. The average interest rate ... |
 The Associated Press | Bally Total Fitness files for bankruptcy again San Francisco Chronicle, USA - Refinance volume more than tripled, while purchase volume increased 38 percent. Refinances accounted for 69.1 percent of applications, up from 49.3 percent. ... Thanksgiving week saw rise in mortgage activity |
Low rates breathe life into mortgage market Columbus Dispatch, OH - Spurred by average interest rates on 30-year fixed mortgages that are under 5.5 percent, many homeowners are considering refinancing. "The mortgage rates ... |
 Boston Globe | FDIC: Government idea won't help people in need MarketWatch - ... mortgage rates down definitely is positive, but it doesn't help people that currently have unaffordable mortgages because it doesn't help them refinance ... Mortgage proposal has faced conflict |
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