The Daily ReTORt

My photo
I'm no longer posting here. Visit my new blog -> WWW.THEDAILYRETORT.COM

Thursday, May 13, 2010

The Easiest Way to Save Big $$$ on Your Mortgage

Anyone with a mortgage understands the phenomenon of interest. We pay a lender a fixed or an adjustable interest rate for the “privilege” of borrowing their money, for a specific period of time, to pay for the home – however, that duration of the loan is a critical, yet often overlooked component.

That’s because during the life of a typical 30-year mortgage, it is common to pay more than 150%-200% in interest alone, over and above the actual amount borrowed (the principal). That’s because the longer you take to pay back the principal, the more money you’re forced to pay in interest over the life of the loan.

Conversely, if you can quicken the payment schedule on the principal you can reduce the total interest expense of your loan. This can EASILY be achieved by making a smaller mortgage payment every two weeks, rather than the single-larger payment you’re currently making once a month.

With a biweekly payment, it’s important to note that you’re not paying any more than your current monthly mortgage amount, you’re simply dividing that amount and paying a portion of it sooner.

This quickened payment model can cut the life of a 30-year loan by up to 10 years, while simultaneously accelerating the rate of equity you build in your home. Again, you’re not paying more each month – you’re paying the exact same amount, but you’re paying a portion of that amount sooner which allows you to take a two-week bite out of the life of the loan. That repeated two-week reduction in the life of the loan, adds up over time to real savings. It’s not a refinance. You don’t switch lenders.

There are a bunch of administration companies that offer this service, which all have web sites with more information. Just Google “biweekly mortgage” to get started.

DON'T try this on your own, contact a professional.

When we purchased our current home, we went with Nationwide Biweekly Administration a subsidiary of Nationwide Insurance. Here’s their web site for details:

I don’t get a referral fee or anything like that for embedding this site. I’m merely offering some valuable information that’s worth looking into. It only cost us $45 to set up the program, and we’ve literally saved thousands in the past three years.

I hope this was helpful. Has anyone else done a biweekly mortgage? NBA just came out with a weekly version which further reduces the total interest payment and accelerates the equity, which I’m looking into. I’ll keep you posted if we switch to that option.


  1. You can actually accomplish the same thing by making one additional principle payment each year -- reducing the 30 year mortgage to about 20 years.
    If your mortgage includes no pre-payment penalty, you can do this yourself without paying anybody a management fee.

  2. Excellent point Jeff, thanks for making it!