Want To Save Big Dollars? Pay Your Mortgage Bi-Weekly

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river2We get it. No one really enjoys making a mortgage payment each month. But here’s a secret: You can shorten the length of your mortgage loan without refinancing your loan to a shorter term.

You simply have to make bi-weekly payments.

Here’s how this works: Normally, you’ll make 12 mortgage payments a year, one each month. If you owe $1,000 on your mortgage each month, you’ll make 12 mortgage payments for a total of $12,000 a year. But if you split your payment into bi-weekly payments, you’ll pay $500 every two weeks.

This pays off in a big way: Because there are 52 weeks in a year, you’ll make 26 bi-weekly payments. That is equal to making 13 monthly payments in a year. That’s right, with the bi-weekly mortgage payment, you’d make one extra mortgage payment each year than you would when paying 12 standard monthly payments.

Bi-weekly payments reduce the payoff time of your mortgage loan. The number of months you chop off your mortgage varies depending on the size, interest rate and length of your loan. If you are paying off a 30-year, fixed-rate mortgage loan of $180,000 with an interest rate of 4%, you’ll pay off your loan in 25 years and 11 months, eliminating four years and one month of payments. That means you’ll also save more than $20,000 in interest during the life of your loan.

Those are some compelling reasons to consider a bi-weekly payment plan. Call us today if you are interested. We’ll walk you through the process and help you make the right decision for your financial situation.

Categories: Mortgage, Mortgage 101, Mortgage choice, Mortgage ideas, Mortgage options, Mortgage points, mortgage rates, Mortgages, MPP mortgage, Uncategorized, Wilmington NC Neighborhoods

LOOKING AHEAD | Rising Rates? Who Knows? For Now They’re Still Affordably Low

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 www.WilmingtonNC-realestate.com or www.cbbaker.com

river2It’s easy—when you’re ready to buy a home and apply for a mortgage loan—to become obsessed with interest rates. How high will the average interest rate on a 30-year fixed-rate mortgage loan rise in 2016? How about on a 15-year loan?

The truth is, no one knows what interest rates will do in 2016.

This isn’t unusual. No one knew what rates would do last year, either. Remember the predictions that mortgage interest rates would soar in 2015? Those predictions turned out to be incorrect. In the fourth quarter of 2015, the nationwide average interest rate on a 30-year fixed-rate mortgage was still under 4%. And the average rates on 15-year fixed-rate mortgages were under 3.5%.

There’s no guarantee that rates won’t rise throughout 2016. But this is important to remember: As 2016 kicked off a new year, average interest rates were still near historic lows. So even if rates do rise this year, they’ll have to jump significantly not to be nicely affordable by historic standards.

Outlook: Small changes in interest rates won’t impact your ability to afford a mortgage by much. If you take out a $150,000 30-year fixed-rate loan at 3.8%, your monthly payment—not including taxes and insurance—will be around $700. If the rate on that same loan increased to 4.1%, your monthly payment—again excluding insurance and taxes—would rise to $724. That’s a difference of about $24 a month or about $288 a year.

The message here? Yes, it’s better to buy while interest rates are low. But don’t let an obsession with rates keep you from pulling the trigger on your dream home this year. The odds are high that mortgage rates throughout 2016 will remain at attractive and affordable levels.

Categories: 2016 Interest Rates, Looking Ahead 2016, mortgage rates, Uncategorized

2016 Interest Rates | Does Locking In An Interest Rate Make Sense?

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If you’re ready to apply for a mortgage loan, the odds are you’re following the ups and downs of mortgage interest rates carefully. This isn’t surprising; a higher interest rate will make your monthly payment bigger. A lower one can save you a significant amount of dollars each month.

But when should you lock in a mortgage rate? That’s a challenge that many borrowers face.

In a rate lock, your mortgage lender agrees to hold the current interest rate for which you’d qualify for a certain number of days. Your lender might agree to hold an interest rate of 4% on your 30-year fixed-rate mortgage for 15 or 30 or 45 days, for example.

If you don’t lock, your rate might rise before you complete the loan-application process. But remember that average interest rates might also fall after you lock in a rate. That is a risk that you take when ordering a lock.

Remember, too, that locking a rate usually isn’t free. You may have to pay for the service, though what you pay varies depending on your lender and how long you want to lock-in that interest rate.

If you’re debating whether locking a rate makes sense for you, call us. We’d be happy to talk about the pros and cons of finding a rate and locking it in place.

 

Categories: #selling homes, Home Ownership Options', Locking in a interest rate, mortgage rates, Uncategorized


Kay Baker Associates | 1001 Military Cutoff | Ste 101 Wilmington, NC 28405 | kaybakerassociates@ec.rr.com | 910-202-3607 | Fax 910-338-2428

Copyright © 2017 Wilmington NC Real Estate Guide. All rights reserved. Disclaimer: All content on this blog is my own opinion and should not be treated as fact or relied upon when purchasing or selling real estate.