Quite a few mortgage companies frequently advertise that they can help you pay off your mortgage in a lot less time. These services, which are known by several names, including "mortgage accelerator", state that they can cut as much as ten years from your thirty year repayment schedule. All you have to do to reap the rewards of their system is to sign up by paying a costly fee. Is a mortgage accelerator worth the expense?
These programs essentially offer what is often caled a biweekly mortgage. The mortgage company will charge several hundred dollars to sign up for their plan, as well as a fee every two weeks. By signing up, you agree to let them take one half of your house payment out of your bank account every fourteen days. The systems do work, but not because of any financial magic used by the lenders that provide the services. The programs work because you are paying more money.
There are fifty-two weeks in a calendar year. By removing one half of your house payment out of your bank account every 14 days, you are making twenty-six half-payments, or thirteen full payments every year, as opposed to the twelve payments you were making previously. By offering an additional payment every twelve months, you are repaying your mortgage principal sooner and reducing 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 back your mortgage.
Are these systems worth your time? They might be, but only if you are somewhat lazy. It isn't essential to enroll in a system or pay upfront and pay regular fees to take advantage of this method of repayment. Almost any lender will allow you to pay additional funds whenever you like. All you must do is indicate that the extra cash is to be applied to the loan principal. Quite a few lenders include a place on the form that you mail in or use on their Internet site for that express purpose. You may send in a little additional cash each month, or you could mail in one full extra payment every year. The net result is just about the same regardless.
If you are interested in making additional payments towards retiring your mortgage early, all you need to do is get in touch with your lender and inquire about what opportunities might be available. You will likely find that any one of a number of free opportunities are available.
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