Home › Forums › General › EHTrust/EHT Topics and Creative Real Estate Financing › A Mortgage, Question for you.
June 29, 2011 at 7:15 am #6797
We have a $160,000 mortgage with monthly payments over 18 years at 10%. But my wife and i both get paid weekly so we decided to switch to weekly payments.June 29, 2011 at 1:15 pm #33826
What’s the question?June 29, 2011 at 1:50 pm #33827
You’d better check with your lender before you start doing this unilaterally- a lot of them would have a problem with weekly payments due to the excess accounting. Some lenders will accept bi-monthly payments but that’s usually as often as they’ll go.
There are a couple work-arounds for that. If the lender won’t accept more than one or two payments (configured as payments, not additional principle) try banking weekly payments of 1/4 of the payment EVERY week. Each time you have four payments (a full monthly payment) saved, send it in as your regular payment. Four times a year you would have saved your regular weekly payments plus an additional payment. Send this additional in with your regular payment, preferably in a separate check, plainly marked FOR PRINCIPLE REDUCTION ONLY. This will be the equivalent to making 13 monthly payments a year and your lender shouldn’t have a problem with it. It does require a little more discipline on your side, but it does have it’s financial advantages.
The second method makes a lot more sense, but it depends on knowing your financial information. No, don’t post it here, but his is what you’ve got to explore for yourself. Do you have equity in your house or is it upside down? Would your credit history allow you to refinance? (That 10% is WAY out of line with current rates, as I’m sure you know.) If there is a pre-payment penalty it should be past the applicable period or at least be negligible by this time. You will probably have to have a 20% down payment and closing costs to refinance. Counting any equity you currently have in your house, is that doable? Try, because the difference between 5% and 10% over a few years is immense! And with a refi you might be able to set it up as semi-weekly payments, which would have you making 13 months payment in a year, similar to the above.
That said, I’m not a CPA, mortgage lender, or financial guru. Maybe one or more of them will chime in.
Jane DiehmJuly 7, 2011 at 5:00 am #33828
What’s the question?
Yeah My friend ….I did’t understand the question. What do you say that people have no knowledge and background about real estate get to post this forum more often?July 8, 2011 at 11:34 pm #33829
Listen to Jane Diehm, her “answer” was the most cogent and helpful of all of the poof you got from our more lofty Members Elite.
I didn’t see your “question” either; but I did see your statement and realized what your question was meant to be, as did Jane. We are masters at interpolation, Jane and I.
I own the joint here and I personally invite anybody to post here, if they register properly, irrespective of what they might already know or not know. That’s the way you learn. Oh yeah, and you also have to be nice and speak kindly to all the other participants (like Gary M. does).
Thank you for broaching the topic, and Jane is right on the money.
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