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Home Economics: Pay Less Interest

Mortgage Bi-Saver reduces the the cost of Interest by over 25%

It's amazing that over the life of a 30 year loan of $100,000 at 8% interest, the interest alone will cost $164160.46 in addition to the $100,000 you borrowed.  Your monthly Principal & Interest payment on that amount comes out to $733.76 a month. 

But what if you paid half the payment on the first of the month, and the other half on the middle of the month - for example (2) payments of $366.88?  The result is you save money?  How much?

MortgageType BiSaver Current
Starting Principal Balance $100,000.00 $100,000.00
Original Months Remaining 360 360
Payment Amount $366.88 $733.76
Escrow Amount $0.00 $0.00
---- ---- ----
Total Principal $100,000.00 $99,993.13
Total Interest $117,948.78 $164,160.47
Total Payments $217,948.78 $264,153.60
Actual Months Remaining 274 360


Results: You save $46,204.82 in interest!  You also pay off 7 years and 2 months earlier!

A BiSaver Mortgage is probably the biggest value you'll see in your lifetime.  It's so simple there ought to be a law against Mortgages that aren't structured as a BiSaver.  But then the mortgage company wouldn't be making such easy money on you would they?

When interest rates are high the Mortgage industry tends to look very favorably to BiSaver programs, but as the rates drop they tend to act like the BiSaver doesn't exist.  Some of the higher quality institutions will offer them, but if yours won't offer the BiSaver program thats OK, you can apply to an independent to manage your existing account as a BiSaver and still reap the full rewards of the BiSaver program.

Refinancing your home is a costly proposition.  To begin with the cost of a initiating a new mortgage includes fees that often add up to nearly $10,000.  The clock starts at zero so it may take years just to pay off the added cost of closing on your new loan.  If you need more cash look at the possibilities of taking a second mortgage or an equity line of credit.   There are times where interest rates can make a refi look attractive however a simple rule should be applied;  Will the total interest on the new mortgage be less then the total interest on your existing mortgage?  If not then you really won't be saving anything.

Just Google for BiSaver to find a quality BiSaver Service.

Google

In the event that you will be refinancing or originating a new Mortgage, here are a few tips to assure that you get the best rate.  Preparation will save you a lot of money over the long haul.
  1. Get your credit repaired.  No matter how clean you think your credit report is, you can be assured there are some things that really don't belong on it.
  2. Have multiple bank accounts.  If you know you're looking at getting a loan maybe over the next year but aren't in any hurry, go ahead and apply for a loan - knowing you won't close on it.  This does a few things;  First the loan administrator will go through an exercise with checking your credit and may offer some input on some things that could be tidied up a bit for a better rate.  Second, the bank wants your business worse then you think.  If you turn them down after they go through the initiation process they most often come back at later dates with better offers.
  3. Check with several different independent brokers.  Each Mortgage agreement is a separate deal.  Some lenders are a little more flexible then others it just depends on how badly they want the business on that particular day.  Of course in your case you're stuck with the payments for 30 years.

Those are the simple tips that get the best deals on a mortgage.