Do you know that after paying 15 years on a 30-year mortgage, you can still owe 90% of the amount that was borrowed?

This simple method of making your payment will dramatically pay down the mortgage...saving several years worth of payments. Paying bi-weekly doesn't mean paying your mortgage twice a month - it means dividing the payment in half and paying that amount every two weeks. And what a difference it will make!

Utilizing a bi-weekly payment schedule will cut years off your mortgage term and quickly increase the equity in your home.

How does it work?

It's really very simple! Instead of making a monthly mortgage payment...you make a payment every two weeks. This automatically adds an extra payment every year, which really reduces the principal on your loan.

For example, let's use a $100,000 mortgage at 7% interest. Your principal and interest payment would be approximately $665 monthly. Cut this in half and pay $332.50 every two weeks. You will then have one extra payment at the end of the year to apply directly to your principal. It's unbelievable that this would reduce your 30-year mortgage to a 23-year loan...saving almost $35,000 in the process, isn't it? The larger the loan, the more dramatic the savings will be.

If you are interested in having a bi-weekly mortgage, call your lender and ask for the cash management department...or someone that can help with payment inquiries. Ask about their options for a bi-weekly mortgage. But always make sure that the extra payment is applied directly to your principal balance. (It wouldn't hurt to keep a record of the call and the person's name that you spoke with...just for future reference). If your lender doesn't have a provision for this option, contact us and we can help with more ways of paying off your mortgage early.

Another way to pay off your mortgage early is to look at your amortization schedule and determine how much of any given payment is being applied to your principal. Just add that small amount to your monthly payment and you will begin to see a decrease in your principal balance. For many years, the amount being applied to your principal will be very small indeed. But paying even this tiny amount can make a huge difference in the term of your loan.

Remember to always read the fine print in your loan documents. Make sure there's no pre-payment penalty. And if there is a penalty, many times it's only for a certain number of years. Usually, they will allow you to pay off a certain percentage of your principal balance on a yearly basis before any pre-payment penalty applies. Doing your research will really pay off. And a bi-weekly loan amortization program will also pay off - big time!

Remember, you're paying the same payment amount...but breaking it down into two smaller payments. It just takes a bit more bookkeeping. The savings will be yours!