To use the calculator above, you’ll need certain details about your loan. That way you’ll save thousands in interest and fees.What you need to know for this calculator But these types of plans can save some people a lot of money, just make sure you do it yourself. I don’t plan on owning my condo for more than 5-10 years so a bi-weekly payment plan doesn’t interest me that much I’d rather save up for my next real estate purchase. All you need to do is send in an extra month’s payment(designated to principal) and this will produce almost identical results to paying bi-weekly with less hassle. My preferred option though is to just add one lump sum payment at the end of every year. You should be able to designate this with them, otherwise they might mistakenly apply it to your next month’s mortgage payment. Talk with your mortgage service provider though and make sure they are aware that your extra payments are going towards principal. Add this much of principal to each monthly payment and your results will be nearly identical to a bi-weekly payment plan. If you want to mimic a bi-weekly payment plan, all you need to do is take your monthly payment amount and divide it by 12. You can use almost any mortgage calculator to figure out what your interest savings will be over the life of your loan and then decide how much you want to add. The first method involves adding principal to your payment every month. I’m a big do it yourself-er(just check out my identity theft plan) and in this case you can easily set up a bi-weekly payment plan yourself that will allow you to save over $2,000 in fees. At $3 a pop, that’s $2,043 in fees over the life of the loan, WOW! My $17,000 savings is now $15,000 because of all these damn fees. Over the life of a bi-weekly payment plan, I would have to make 26 years and 9 weeks of payments or a total of 681 payments to pay off the loan. The e-mail stated that there would be 26 drafts a year, and with each draft, a $3 transaction fee would be collected. It seemed a bit ironic that they were telling me how to pay them less, but alas, there was the hidden fee(not very hidden at all if you ask me). I was pretty surprised to get an e-mail from Citi telling me how I could lower my total interest. Your savings would be much less if you moved after 5 or 10 years and paid off your loan. In order to realize the $17,000 in interest savings though, you’d have to pay off the entire balance of your loan over 26 years. In both cases, my principal paid will be the same amount but I can reduce the length of the loan by four years with a bi-weekly payment plan. I think the former is the more important of the two numbers though. Switching to bi-weekly payments would save me $17,000 in interest and I would pay off the loan four years sooner. Using bankrate’s bi-weekly mortgage calculator, we can see how my payments would break down: For simplicity, we’ll assume it’s fixed for 30 years(even though I’m a big fan of ARM’s!) with a start date of Nov. Since I just refinanced, let’s take a look at my 7/1 adjustable rate mortgage of $220,000 at 3.125%. Sounds like a pretty good deal, doesn’t it? With this specific plan, the one caveat is: “a $3.00 transaction fee is collected with each draft.” $3 per draft is a lot of money so let’s see if this is still a good idea. A bi-weekly mortgage will always have the same payments like a traditional plan, but the length of your loan will be reduced and you’ll pay less in interest.
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