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Lenders & Biweekly Mortgages

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Lenders, Loans, and Biweekly Mortgages
  • Thousands of financial institutions lend money for home mortgages.
  • Only about 2-3% of those financial institutions offer biweekly mortgages.
  • Lenders are in business to make money from the money they loan.
  • The longer a borrower takes to pay off his loan, the more money he must pay the lender (interest charges).
  • Assuming no late fees, a lender makes the most money when the borrower pays back the loan over the entire loan period.
Bank Building Therefore, encouraging homeowners to prepay mortgages biweekly (to reduce mortgage interest over time) is not in the Lenders' best interest.

Some Facts about Loans

  • Loans are comprised of four parts: principal, interest, taxes, and insurance.
    • Principal represents the amount of debt, excluding interest, left on a loan.
    • Interest is the fee that you pay to the lender for his loaning the principal to you for a specific time period.
    • An example of an long amortization schedule that shows Cumulative Principal and Cumulative Interest through a typical mortgage term.
  • Payments remain constant during all fixed rate mortgage lifetimes.
    • During a loan's early years, that part of the payment which repays principal can be as low as 5%, or less.
    • Concurrently, that part of the payment which pays interest can be as high as 95%, or higher.
    • Over time, the percentage repaying principal slowly increases.
  • Amortization schedules are designed to allow banks to make the maximum amount of money at the beginning of the loan.
  • By the end of the first year, very little Principal has accumulated; see the short amortization schedule.
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Refer to this page to learn the answers to these questions:

  • What does a typical homeowner actually pay by mortgage's end?
  • How much can Adjustable Rate Mortgage Holders be overcharged on mortgages?

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Biweekly mortgage schedules help homeowners:

  • Save up to $100,000, or more, in interest charges,
  • Shorten mortgage terms by 9 to 15 years, and
  • Build home equity much faster than traditional loans allow,

Converting your mortgage to a biweekly schedule
is in Your best interest.

NOTE: A biweekly mortgage "schedule" is not the same thing as a biweekly mortgage; a biweekly mortgage schedule simulates a biweekly mortgage, but does not keep the mortgage from being bought and sold by some organizations as a regular biweekly mortgage can.

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The Cost of Lender Conversion to a Biweekly Schedule

Lender conversion of a non-biweekly loan to a biweekly schedule usually requires refinancing and re-qualifying, at a cost to the homeowner of about $4,000 to $6,000.

Why spend thousands of dollars to refinance when you can convert your home mortgage to a money-saving biweekly schedule for only the cost of a one-time fee?

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