What if you could pay off your 30-year mortgage in 22 years?
Would you do it?
Consider this, making bi-monthly mortgage payments instead of traditional monthly payments can shave six to eight years off a mortgage term by adding an additional payment per year, which goes directly to the principal, says Joseph Ellis, an investment strategist.
Ellis was one of several panelists who spoke about money and finance strategies at the 100 Black Men of America’s 23rd Annual Conference at the Hilton Hotel in New York.
Here’s how it works: He and his wife schedule automatic deductions from their checking accounts every pay period (two weeks) that pays their mortgage directly — talk about set it and forget.
Not only do they cut down the risk of missing or late payments which can do severe damage to your credit, they will end of saving $66,000 once the mortgage is paid off, Ellis says.
On the downside, there may be enrollment or transaction fees assessed to borrowers. For some lenders, enrollment fees range from $295 to $379, according to Bankrate.com. Others may levy charges per transaction or an “upfront charge.”
Do the math, if the interest savings you’ll gain over the life of the mortgage outweighs the fees, than a bi-monthly mortgage may be right for you. For more information, check out this bi-monthly mortgage calculator.
This is definitely a topic we’ll revisit in my weekly Cutting Edge blog. Check back later, I’m heading back to the conference, but I’ll keep you posted on other juicy tips and information.
The 100 Black Men of America 23rd Annual Conference runs from June 10-14.
Renita Burns is the editorial assistant at BlackEnterprise.com