Tuesday, February 17, 2015

Greetings Thrifty Friends,

Everybody knows that paying half your mortgage every two weeks saves you lots of money in interest. Or does it?

It depends on who you're giving your money to.

Keep pinchin' those pennies,
Penny

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TODAY'S THRIFTY TIP:

Does your lender actually service your loan?

If it is a third party that handles these payments you might be under the impression that your balance is reducing every two weeks, but the 3rd party service could be debiting your account every 2 weeks and then sitting on your money AND making interest. At the end of each 2 week debit period they now have a full payment and apply that to your lender.

Biweekly mortgage payments are a good idea only if the principle is actually coming down with every extra payment.

And remember, even if you cannot make biweekly payments you can still reduce your principle by paying extra each month and indicating "apply to principal" on each payment.

You will further reduce your interest and pay off your loan faster, and it doesn't cost you one cent!