There are so many services offered these days that you can literally outsource your life. All you have to do is look at the capability of your smart phone to know we’re living in an amazing time of convenience. Breaking myself out of old ways of thinking means I now run towards technology where I used to avoid it.
Now I don’t think technology should replace everything because the experience of doing something yourself is often it’s own reward. For example, you can have Thanksgiving dinner prepared, gift wrapped, and delivered to your front door but the experience of making it yourself is far more satisfying. And it tastes better when you’re the one who made it.
When it comes to your home loan I say let technology help you help yourself. What I mean is sign up for a bi-weekly payment plan and have half payments deducted from your checking and savings account every two weeks. By setting it up so that the deduction from your account happens right after pay day means you’ll be on auto-pilot to huge savings. Now some people will say that making one extra payment per year, say after receiving their Christmas bonus, is the same thing as 26 bi-weekly payments because you’re making 13 total payments. They are right, it is the same thing. But what are the chances that you make that extra payment at a time of year when everyone is spending more money on everything else that comes with the holiday season. If you have bi-weekly payments set up prior to the holidays you can then rest easy in December knowing the mortgage is paid and the bonus goes to buying all those crappy gifts.
The statistics tell us a lot about human behavior and what they say is fewer than 1% of people pay off their home loan early by making one extra payment per year. Also, the numbers support those who set up bi-weekly payment plans by showing you can reduce your 30 year loan down to a 24-25 year loan just by setting up bi-weekly payment plan. If you think you won’t own your home for that long you’ll still be building equity quicker which could be huge if needing to sell in a down market.
By David Hughson
Mortgage Planner & Bi-Weekly Payment Plan Believer