Re: bi weekly mortgage payment

From: Bill La Mar <billamar@cland.net>
Subject: Re: bi weekly mortgage payment
Date: Sat, 05 Dec 1998 11:20:43 -0600

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BOB FORD wrote:

> >I've recently been told (and it should have been obvious) that if
> >you pay your mortgage off in a biweekly manner instead of with
> >monthly payments, you can save yourself a significant amount of
> >interest.  Since my paychecks do me little good in my checking
> >account, when I buy a house I'd like to be able to pay back the
> >loan in biweekly payments.
> >Anyone doing this?  Anyone care to comment?
> >Anyone know of any software (preferably free) that
> >can calculate such savings?
>
> Forget this biweekly payment idea.  If you want to save money
> when you buy a house, pay the maximum amount you can with
> each monthly payment.  That will reduce the total amount you pay
> to own your house.  Any amount you pay monthly over the amount
> you owe for interest will reduce what you owe therefore reducing
> the interest you must pay next month.  The maximum amount you
> will pay for a house is the sum of all the monthly payments if you
> make the minimum monthly payment.  You will need a financial
> calculator to determine the length of time (number of months) it
> will take to pay off a loan if you pay a different amount that the
> required payment.  The math can get complicated if all of your
> payments are not the same amount.
>

An even faster way to own your own home is to invest the extra dollars
each month into an investment such as Vanguard 500 index fund.Because of
the magic of compounding it will build up much faster than the increased
equity in the home. Besides if a person loses a job the equity in the
home is worthless until such time as the home is sold. If you can get
mortgage money for 5% after tax and invest money for 10% after tax you
are using one of the keys to financial security that has worked forever.
This is successfully using the financial perpetual motion machine.
People who have used the nine Keys to Financial Security have
consistently become wealthy.

Bill La Mar

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