Michael Holigan: Paulette Gonyea doesn't want to spend the next 30 years making house payments. So she and her husband are trying to shave some time off their mortgage.
Paulette Gonyea: On our mortgage payment there is a small line that says "X" amount you want to put just towards the principle. You pay your mortgage payment, regular price, and then you put a certain amount down just towards the principle of it. And that's what we do.
M.H.: Just like the Gonyea's, there are millions of other people who are doing the same thing, chipping in a little extra when they can. But there's a better way that will save you more money and more time. It's called a biweekly mortgage. Say you borrow $95,000 at 8% interest over 30 years. Your principle and interest payments would be $697 a month for a total of $8,364 a year. With a biweekly mortgage you would pay half the monthly payment or $348.50 every other week. That would total $9,061 for the year. That's the equivalent of one extra payment. Since your loan is amortized on a biweekly basis, you save more money than you would by simply making one additional payment a year. Depending on your interest rate, this type of mortgage can reduce the length of your loan by as much as 7 years.
P.G.: We want to pay "X" amount of payments and maybe get the mortgage, 30 year mortgage down to 20 years. That's retirement age for us.
M.H.: Biweekly mortgages shorten the length of your note and build equity at a faster rate.
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Episode 46 1996 - 97 Season
| Interactive House - 1 | Interactive House - 2 | Cleaning Your Computer | Destination 2000 | Bi-Weekly Mortgage |