Mortgage Payment Options
2008-08-21 19:27:14
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The standard mortgage payment is paid once a month, and it is a principle and interest payment. At the start of your mortgage you will pay much more interest then principle, and near the end of your mortgage, you will be paying much more towards your principle. A mortgage is usually calculated to be paid over 25 years; although, different repayment options are available.
In the past, people have paid mortgage payments on a monthly basis; however, in recent years more and more repayment options have became available. SOme of these options include: weekly, bi-weekly, semi-monthly, and accelerated.
What Payment is Best for You?
There isn't a great amount of savings depending on what option you choose; however, if you choose an accelerated payment, then you will be paying more but you will be paying off your mortgage faster. If you are paid bi-weekly, then it is best to choose a bi-weekly mortgage payment. If you are paid monthly, then you are better going for the monthly mortgage payment. If you are paid weekly, then it is better to go for weekly payments.
Accelerated Payments
Accelerated payments are a great way to save a lot of money and pay off your mortgage sooner. The savings accumulate based on the additional amount paid towards the mortgage each month. The most common and most effective payment plan is a bi-weekly accelerated payment option.Big Decisions on Payments
When deciding what your initial monthly payments should be, it is usually better to have a lower down payment and more money for closing costs, then to put a big down payment with less available funds. This is because at a later date, depending on your mortgage type, you can always put lump sum payments back onto your mortgage; however, you most likely won't be able to take money back off of your mortgage without doing a refinance. Also, when selecting your repayment amount and amortization, it is always better to take the smaller amount to make sure that you have financed correctly. If you have extra funds, then you can, depending on your mortgage, increase your monthly payments or make lump sum payments towards the principle of your mortgage. Make sure that you do all necessary budgeting before you complete your mortgage application.Ready to get the best mortgage? Click here to find out how!
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Source: Mortgage Payment Options