Get a biweekly mortgage or make extra payments on your own?Written by Syd Johnson
Consumers are more aware than ever of advantages of a biweekly mortgage. This is a type of mortgage where you make two equal payments per month instead of one. A Biweekly mortgage is great because you end up making one extra payment per year. This extra payment will decrease your principal and over life of loan, decrease amount of interest that you will pay for borrowing money.For average loan, difference means that your 30-year mortgage will be paid off in approximately twenty years. Today, lenders are eager to help customers switch to biweekly payment schedule because they get their money back in much less time. As with most loan or credit products, small monthly deposits plus time leads to a rapid reduction in your outstanding balance. Getting Started To set up a biweekly mortgage call your lender or servicing company and ask them to change your payment schedule. Always ask upfront if there are any fees involved. Usually there is one time administrative fee to set up your account. Some lenders will also charge a recurring fee that is added to every payment. Even fewer lenders will charge both a one time fee and recurring servicing fee. As long as exact amount of charges are stated up front you should still see a significant decrease in your loan balance annually.
| | What is an Adjustable Rate Mortgage?Written by Syd Johnson
An adjustable rate mortgage is a type of loan where interest rate and monthly payments vary over time. The rates are adjustable usually starting out with lowest interest rates up front and highest rates coming later on in life of loan. The interest rates are increased according to a predetermined schedule. Usually, you can expect increases every 6 months to a year.Low starting rates The big advantage that an adjustable rate mortgage (ARM) offers is low initial payments. If your lender cannot qualify you for a fixed rate mortgage, you can probably get an adjustable rate mortgage instead. Of course, make sure that you can afford payments at high end as well as low end of interest scale. Always available Another big advantage of an adjustable rate mortgage is that they are always available. If interest rates are incredibly high, you can get an ARM quoted at a much lower rate, because lender will still make a lot of money over life of your loan.
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