Bacon Shortens Your Mortgage Term

Bacon Shortens Mortgage Term

Applying extra dollars or “bacon” toward mortgage payments is an economical method to rid of one’s mortgage early.  When closing on a home loan, most mortgage borrowers go into shock when they discover the total amount they will be paying to finance their home.  There are several ways to shorten the mortgage term to save thousands.

Bi-Weekly Payments

Borrowers can use simply make use of the 52 weeks in a year to add an extra payment to the principal.  A Bi-Weekly program has 26 opportunities to make payments to the bank using what adds up to a payment annually.  The extra “bacon” applied annually as a payment will reduce a mortgage term by a little over six (6) years.

Homeowners can inquire with their lender about a bi-weekly payment program to save on their payments over the long run.  The Bi-Weekly program is excellent for borrowers who want an easy to manage payment option.

The Three Golden Rules of Mortgage Shopping

Fixed Products
A home loan in which the interest rate will remain the same through the life of the loan, most often 15 years or 30 years. More recently, the 10, 20 and 40 year fixed mortgages are being offered on the market. Rates for shorter term fixed mortgage are lower, but payments will be higher. Borrowers that do not want to chance their payments changing over the life of the loan prefer the fixed rate mortgage.

Adjustable Products (Adjustable Rate Mortgages, ARMs)
Home loans with periodic changing interest rates based on a standard financial index are called Adjustable Rate Mortgages or ARMs. Most ARMs have caps on how much an interest rate may increase. ARMs have optional initial fixed rate periods in 1, 3, 5 or 7 years. ARMs, most often, have cap limits on the total rate on the life of the loan, as well as, how much a rate can increase over a period. Borrowers with shorter views on keeping their property choose ARMs.