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Fastest Way to Pay Off Your Home Loan

Be yourself; Everyone else is already taken.

— Oscar Wilde.

There has been a lot of talk going around lately about bi-weekly mortgage payments and how they can help you pay down your mortgage faster. Maybe you heard somewhere that making a payment every two weeks instead of once a month — can help you pay off your loan sooner. This is true, but did you know it has more benefits than just that one?

What are Bi-weekly Mortgage Payments?

When you buy a home from a mortgage lender, you will have monthly payments that are due on a certain date of each month. This is set by default unless you ask for more options. If you split your 12 monthly payments in half you will have 26 payments instead of 12, and half of 26 is 13 so you end up with one extra payment per year. If you apply that to the principle of your loan you can reduce the term of your loan by as much as 5 years.

Does Making Payments Every Two Weeks Help?

When you look at it like this it sure does. Just one extra payment per year can lower your balance. What if you made 2 extra payments per year? That would drop it even lower. Adding just one additional payment could change your mortgage terms from 30 years to 25 years. That really is a big help. And besides that, here are a few more good reasons to use this strategy:

● Pay off the balance faster

● Pay less in interest over time

● Build equity faster

● Easy to deduct from the budget

How Do Bi-weekly payments work?

The strategy itself is simple. You just make one additional payment per year. This can be done a couple of different ways. You can opt for making bi-weekly payments vs a monthly payment if you are just starting your loan process. Many lenders have this option, you may need to call around when doing your research.

Another way is to divide your mortgage payment by 12 months and save that amount per month and submit that amount once per year towards the principle. You can also use your tax return if you want to use it for that. But make sure that your lender applies the payment to the principle. Because if they don’t then that money will just go towards the interest and you won’t get any of the benefits mentioned here.

Don’t Just Send in Extra Payments

In order for this strategy to work, it must be done properly. Some people make the mistake of thinking that they can just divide their monthly payment in half and send it in twice or send additional money on top of their regular monthly payment. I have heard stories of people doing this and then they don’t understand why their balance isn’t coming down. You have to set this up with your lender to do it this way, and they need to understand that the extra payment goes to the principle. Otherwise, all you’re doing is paying the interest and that isn’t going to help you.

What Does This Payment Strategy Work For?

You can use this payment strategy with your mortgage payments if your lender agrees. This works for any home buyer programs, it doesn’t only apply to FHA home loans. A lot of finance companies, banks, and credit unions will allow you to do this for your car payments as well. Always just ask your lender if they participate in bi-weekly mortgage payments, or choose that option if it is offered at the beginning.

Is it financial child abuse?

I had seen so many client cases where parents had abused their children’s credit before they even had a fighting chance. The parents went and purchased items in their minor children’s names or have had young adult children cosign for purchases after neglecting their credit. How fair is that? It’s not. Now I feel that we need to have a balance with debt and #debtfreedom. Yes, I know that is an oxymoron, but most families are not going to be able to save to purchase a house unless they started at a young age. Most adults are not taught financial literacy in high school or at home, so the experience is the teacher. Are you catching where I am going with this? 

I think this sucks okay! But it made me sit and evaluate my parenting skills when it came to personal finance. Are my children financially ready and prepared to leave the nest? Will they be boomerang kids? Are we prepared for college? I was about to go down the rabbit hole. STOP! Let’s make the changes today. 

 I have decided my goal is to make sure at least 100 individuals are as financial confident as possible. Meaning, let us start to have the conversations that make us feel uncomfortable about #personalfinance. How are we supposed to know how to fix these issues of we can’t identify them?

Goal setting

Children are little life-sized mirrors of their parents, so we have to reflect on the best parts that we can. That doesn’t mean we are perfect, but we can be perfected in areas of our lives. So let’s talk! What can we do to help reduce the effects of personal finance and parenting? 

I know this may be hard but if you , check out our budgeting ebook to help you gain control of your finances or our Do it yourself credit repair workbook!

Until next time 

Shann

PS. Be sure to check out my YouTube video going into detail about my approach to parenting and credit

Is it a good idea to pay extra on my car?

I get this question a lot. Short answer is yes if you can afford it. I encourage paid debts, I really do. But there is a proper way to do it.

I recently spoke with a client, who was concerned because her car loan was not reflecting the extra payments she made. As I listened to her story, I thought, this happens all too often?

When you choose to pay an extra payment towards a loan, be sure that the amount is notated to go towards the principal. The principal is the amount you borrowed. The interest jacks up the money the lender receives in exchange for lending you the money.

Most lenders will apply the notated payment to principle as long as you are current on the note. For instance if your car payment is $400 and you pay $500 then note that $400 is for the payment due and $100 is for principal.


In the case with the client above, the lender made them through pay western union, which didn’t give the option to apply the payment to the principal. Nor did they provide any other payment option. Talk about shady lending practices .

What is subprime lending, you ask? The short version is the type of lending option you have when your credit score is below 620. If you are in this range, you have about 68 million other people with you, according to this FOX news article. Lousy credit costs much money. 

How do you overcome the attack of the never decreasing car loan? It’s simple. If you have horrible credit, work on increasing your score with a secured credit card, such as a Credit builder card, or open a Self lender . When used responsibly, these account types can put you in a position to refinance your vehicle with a better interest rate. In the event you were scammed off the top and purchased a car that is too old to refinance, do all you can to pay down the principal. Even if it means you have to call the bank and make sure the payment is applied correctly.

Until next time,

Shann 

Who is Shannon?

Such an easily complicated answer.

I’m a wife, mother of three busy boys, sister, Auntie, friend to a few and an educator to many.

Why have I chosen to educate people?

  • Because it helps people avoid mistakes I have made
  • Because everyone has a gift and this is mine
  • Because your success is my success

Flat out. You see I’m an honest person who is a sharer. Back in 2011 we were being evicted with a young family. We didn’t have anywhere to go and found ourselves in pickle. Within a year, we were able to purchase a home. In all seriousness we were evicted in August 2011 and purchased our home in July 2012. No cosignor, no gifts from family. Just faith in God and some know how. Fast forward 8 years later, we are still homeowners, have zero car payments and a vision to help more individuals become financially confident.

I want to say thank you. I have been wanting to blog for a while, but just lacked the discipline to do so. That’s another one of those honest moments. Although I am a new blogger, I have had success with

  • Educating clients to purchase a home within 1 year of an eviction
  • Taught clients how to save $100-600 within 30 days to become better budget-er…having control over your money is sexy.
  • Coached clients to achieve student loan debt forgiveness of $130K within 3 months

You can expect to find general education of what you can do to help you achieve these types of successes. Those individuals didn’t have some special blessing, they just worked the process.

As a licensed realtor and credit counselor, I want to help and be your one stop for all things credit and housing. Do me a favor and share the things you find valuable with friends and family and let’s get this train rolling.

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