Cheaper Mortgage: Knock 9 Years Off, Easily

07/22/2008 05:12 am ET | Updated May 25, 2011

The following is from the Introduction to the forthcoming second edition of Mortgage Free!: Innovative Strategies for Debt-free Home Ownership by Rob Roy.

Maybe you decide that building a house is not for you. Well, here's a tip, suggested by Bob Duquette of Adirondack Funding Services of Plattsburgh, New York, that can save you nine years of payments (and $41,500 in the example given) on a thirty-year mortgage, or two and one-half years on a fifteen-year loan. It's something you can do right now, and it is practically painless. At least, you won't notice the pain. This mathemagical strategy involves making biweekly mortgage payments instead of monthly payments. And the biweekly payments are exactly half of what you would pay by the month. There, isn't that easy?

"But how can that save me time and money?" you ask.

The trick is that you are making twenty-six half payments in a year instead of twelve full payments. This is like making an extra full payment a year. As we've already seen, prepayment of your mortgage is the best investment you can make. In 1995, the typical conversion cost of refinancing your mortgage along these lines was about $295. In an article by Joe LoTemplio (Plattsburgh Press-Republican, May 21, 1995), Duquette says that about three-quarters of the people who learn about the biweekly payment scheme go for it. He says, "The nice thing about it is that it doesn't interrupt your cash flow and you don't have to come up with that large amount once a month."

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