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Buyer Tips

Bi-Weekly and Weekly Payments
Most mortgages have the option to allow payments to be made on a weekly or bi-weekly basis. This option may be desirable for two reasons. The first is that it can save you money as you can expect to pay off your mortgage about 4 years sooner. This can save you dramatically over the life of your mortgage. The other reason why these options are so popular is that if your employer pays you on a weekly or bi-weekly basis, you can simplify your budgeting by making the payment line up with the way you are paid.
Making Extra Payments
Paying extra amounts on your mortgage can make big interest savings over time. When we select a mortgage company, privilege payments options are something that we look for. A 20% privilege payment will allow you to pay off up to $20,000 per year on a $100,000 mortgage. It is important that the privilege payment also be flexible to allow you to pay smaller payments on the mortgage and as often as you wish. An extra $1,000 periodically paid on a mortgage can help you become mortgage-free faster.
Advantages of Bigger Down Payments
As mentioned above—when you put a 25% down payment on your purchase—you can avoid the CMHC premium. More importantly the larger the down payment, the lower the amount of interest you will pay over the life of your mortgage. It is important to note that it may not be wise to stretch yourself to increase your down payment and end up borrowing on credit cards or a line of credit at a higher rate.
Short-Term Rates vs. Long-Term Rates
The options for mortgages available can be very confusing for most mortgage shoppers. Terms for mortgages vary between variable and fixed rates and 6-month terms to 10-year terms. Taking a variable or floating rate mortgage can provide savings. Typically the shorter the term or guarantee of the rate, the lower the rate will be. This does not always happen, depending on the marketplace and the economy, but history has shown that short-term rates tend to be lower than long-term rates. The upside of a variable rate is the strong potential for interest rate savings. The downside is the fact that you are accepting the interest rate risk without a guarantee. If you are considering a variable rate mortgage, you need to look at your own risk tolerance and your cash flow available to deal with potential increased payment. Considering projections of rates and where we see interest rates are heading can also be important in this decision. Make sure you talk to an expert when you are making this decision.

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  • Address

    Mallory Realty Company, Inc.
    110 Arba St
    Montgomery, AL 36104
    Phone: (334) 262-7773

    Business Hours

    Mon - Fri: 09:00 AM - 05:00 PM
    Sat - Sun: Closed
    In Business Since 1972

    Customer Segment

    Residential & Commercial