Before we set the sales price of your house, I’ll run a Comparative Market Analysis (CMA) that will show the listing price of similar houses in the area as well as the prices at which the houses actually sold. Additionally, the analysis will give us information about houses currently on the market and about houses that were on the market but never sold.

Next, I’ll ask you about your goals in selling the house. Everyone who sells a house has different goals that need to be factored in when calculating the selling price.

Is your goal to get the maximum sales price for your house?

• If so, are you willing to have your house on the market for many months?

Is your goal to sell your house quickly?

• If so, are you willing to sacrifice some of your potential profits to sell more quickly?

Would you like to establish a balance between selling your house quickly and selling at the top end of market value?

Market conditions will play a role in setting the sales price of your house. I’ll factor in how quickly houses are selling in your area, interest rates, the strength of the school system, and finally whether it is a buyer’s or seller’s market.

I’ll then recommend a price at which to list your house to meet your goals in the local market.

Writing the Offer – Financial Considerations

It is standard practice to make a purchase offer contingent upon obtaining a mortgage. Because of this contingency, the seller will want the details of your financing plan included in the offer.

• Down Payment - In the purchase offer, we will include the down payment amount you will apply toward the purchase. This will give the seller further evidence of your qualifications to secure a mortgage.
• Interest Rate - Within the purchase offer, we will provide a safeguard against any dramatic change in interest rates between when the offer is made and when the loan is closed. The offer will not only be contingent upon qualifying for a mortgage, it will also be contingent upon an interest rate within a certain range.
• Seller Assistance - If the house you select is at the top-end of your budget range, we may want to include a request for seller assistance to pay a portion of the closing costs traditionally paid by the buyer or to help “buy-down” your interest rate. Other seller assistance may include having the seller “carry back” a second mortgage to cover your down payment or even 100% seller financing.

With any of these seller assistance options, you can expect to pay a higher purchase price than if you had handled the financing through a traditional mortgage lender.

Getting ready to buy your first property in the Charlottesville Area and Central Virginia?

Buying your first house is a huge achievement. Of course, it’s also intimidating. You’ll definitely want an experienced agent looking out for your greatest interests, and you’ll probably need some expert opinions along the way. I would be honored to aid you in purchasing your first house.

Not all Real Estate Agent are equally able to help you find a home. My dedication to you, my client, is what makes the difference. Here are some things you can expect when you use Denise Ramey, Real Estate Agent for your first time home purchase.

• The process of buying a house has quite a few stages. I’ll be there for everything from finding the right home among all the properties available in the Charlottesville Area and Central Virginia, to providing expert guidance on closing costs and everything in between.
• I’ll assist you with setting your wish list of features that you want in your home, your community, and your school district.
• I’ll walk you through the mind-boggling financial aspects of purchasing a house, including the different mortgages and home buying methods accessible.
• I’ll monitor all the brand new listings, and make sure I pass on all the homes that match your criteria.
• Basically, I will do everything in my power to make sure your home buying process is stress-free.

Finding the perfect home for you in the Charlottesville Area and Central Virginia is my business, and I’m ready to go to work for you.

Just give me a quick call at (434) 960-4333 if you can’t find the right home for you here. I’ll search the MLS plus use my industry contacts to find the houses in the Charlottesville Area and Central Virginia that meets your needs.

Securing financing is just one aspect of a real estate transaction. Denise Ramey, Real Estate Agent is experienced at assisting new and experienced in all areas of real estate. Contact us if your needs include a real estate pro ready for the business side of real estate.

Are you going to finance a new home in the Charlottesville Area and Central Virginia? Denise Ramey, Real Estate Agent can help.

For a lot of people, applying for mortgage financing can be one of the most distressing parts of purchasing a house. But it doesn’t have to be. Having connections with a lot of lending companies in the Charlottesville Area and Central Virginia has helped me understand some things that will make the process of applying for a loan uncomplicated.

1. Put together a list of questions about your loan program

If you find that you do not fully realize the ins and outs of all the different loan programs, be sure to have a list of questions. At times, it can be hard to understand the distinctions between fixed and adjustable rate mortgages. I or one of my trusted lenders will assist you with understanding the advantages and disadvantages of both.

2. Decide when you want to lock

When you lock in the interest rate, a mortgage lender is guaranteed to hold to the interest rates for the loan – generally at the time the loan application is presented. By floating the rate, you can lock the rate anytime between the day you apply for your loan and closing. Buyers who elect to float presume that interest rates will drop in the near future. Click here to see the outlook for the next 90 days of interest rates.

3. Decide if you want to pay additional points to reduce your rate

Generally you can decide to pay additional points to lower the rate of your mortgage loan. Each point is 1 percent of the mortgage loan and is payable in cash at closing.

4. Gather your paperwork

Acquiring a loan requires lots of paperwork, so you should take some time to get all your documentation together. See the next slide to get a feel for normal information that goes on a loan application.

In general, the documentation you will need includes:

• Check for application fee

Property Information (if you already have a contract on a house)

• Purchase Agreement.
• Copy of legal description and MLS sheet.
• If you are selling your current home, copy of listing contract.
• If you have sold your current home, copy of settlement statement (HUD-1).

Income & Assets

• Pay stubs for the last 30 days.

For the past two years:

• Names and addresses of each employer.
• W-2s
• Statements for each bank, mutual fund, and/or investment account for the last three months.
• Estimated value of personal property and furniture.

If you have made any large deposits to your accounts:

• Explanation and source for deposit.

If large deposit was a gift:

• Signed gift letter (lender can supply).
• Copy of gift check.
• Copy of deposit receipt.

If you own more than 25% of a business:

• Corporate or partnership tax returns.

If self-employed:

• Tax returns for the last three years (with schedules).
• Year-to-Date Profit and Loss Statement prepared by an accountant.

If you own rental property:

• Tax returns for the last two years and current rental agreements.

If you are retired:

• Pension Award Letter.

If you are counting child support as income:

• Copy of divorce settlement.
• Copy of twelve months of cancelled child support checks.

Debts

• Names, addresses, account numbers, balances and monthly payments on all current loans.
• Explanation of credit report anomalies, including:
• Late payments, credit inquiries in the last 90 days, charge-offs, collections, judgments and/or liens.
• Bankruptcy filed within last seven years (bring a copy of your bankruptcy papers).

VA Loans

• Copy of DD Form 214, Report of Separation.

Miscellaneous

• Photo ID and proof of Social Security number.
• Residence addresses for the past two years.
• If applicable, a copy of your divorce decree.
• If you are not a citizen, a copy of the front and back of your green card.

Title Insurance = Peace of Mind

Purchasing a home is probably the single biggest investment you will ever make. Before closing on the house, you’ll want to know that no other individual or entity has a right, lien or claim to the property.

Determining that your rights and interests to the property are clear is the business of a title insurance company.

For a modest, one-time title insurance premium, you will receive continuous title insurance protection in an amount equal to the purchase price of the property or its current market value. This premium typically includes your “owners” policy as well as the “lenders” policy.

One of the marked advantages of title insurance is that prior to a policy being issued, the title insurance company completes extensive research into relevant public records, maps and documents to trace ownership of the property and determine if anyone other than you has an interest in the property. Through its research, the title insurance company can usually identify any title problems that may arise and have these problems cleared-up prior to closing.

Your title insurance owner’s policy will describe the property and outline any recorded limitations on your ownership. It will also set forth the title insurance company’s responsibilities should any claim covered by the policy terms arise. Typically your title insurance will protect you from loss:

• if someone contests your title in legal action (the title insurance company will defend the title at no expense to you),
• or if there is a title defect that cannot be eliminated (the title insurance company will protect you from financial loss – up to the amount of the policy).

Also referred to as a listing agreement, the listing contract gives a licensed real estate professional authorization to act on your behalf in the sale of your home. Listing contracts come in all shapes and sizes, but there are characteristics which are common to all. Among the elements of any valid listing contract are:

• Writing – All real estate contracts must be in writing.
• Employment – The listing contract is a personal services contract between you and the broker. It contains all of the terms and conditions of employing the broker and authorizing the broker to represent you in marketing and selling your home.
• Compensation – For any contract to be valid, there has to be compensation. The listing contract will specify the amount and timing of payment to your broker. Typically, payment is an agreed upon percentage of the sales price, payable at closing. It is important to note that your obligation to pay your broker may not absolutely depend on a finalized sales transaction. For example, if the broker finds a bona-fide buyer who is willing to pay your asking price and agree to the terms you have offered, but you get cold feet at the last moment and decide not to sell, the broker has done his job and is entitled to be paid under the terms of the listing contract.
• Title – All listing contracts will ask who has title to the property. Property can’t be sold unless everyone with holds title interest in the property are part of the sale.
• Termination date – You shouldn’t sign any listing contract without a specific termination date. The most common duration is 180 days. If the contract has an indefinite duration such as until sold, or no duration specified at all, dont sign it. The listing contract is a legally binding document and you don’t want to get locked into one with no clearly defined termination date. If the contract expires before your home sells and you still want to keep using the same broker, you can simply sign a new contract.

There can be and often are other elements to a listing contract. As with any legal document, you should read the listing contract very carefully and be sure you understand exactly what you are agreeing to before signing. If you have any questions about your listing contract it would be wise to consult a lawyer for clarification.

Why you should get an Inspection

Whether you are buying or selling a home, you should have a professional home inspection performed.

A home inspection will look at the systems that make up the building such as:

• Structural elements, foundation, framing etc
• Plumbing systems
• Roofing
• Electrical systems
• Cosmetic condition, paint, siding etc

If you are buying a home, you need to know exactly what you are getting. A home inspection, performed by a professional home inspector, will reveal any hidden problems with the home so that they may be addressed before the deal is closed. You should require an inspection at the time you make a formal offer. Make sure the contract has an inspection contingency. Then, hire your own inspector and pay close attention to the inspection report. If you aren’t comfortable with what he finds, you should kill the deal.

Likewise, if you are selling a home, you want to know about such potential hidden problems before your house goes on the market. Almost all contracts include the condition that the contract is contingent upon completion of a satisfactory inspection. And most buyer’s are going to insist that the inspection be a professional home inspection, usually by an inspector they hire. If the buyer’s inspector finds a problem, it can cause the buyer to get cold feet and the deal can often fall through. At best, surprise problems uncovered by the buyer’s inspector will cause delays in closing, and usually you will have to pay for repairs at the last minute, or take a lower price on your home.

It’s better to pay for your own inspection before putting your home on the market. Find out about any hidden problems and correct them in advance. Otherwise, you can count on the buyer’s inspector finding them, at the worst possible time.

Tips on Reading an Inspection Report

When interviewing a home inspector, ask the inspector what type of report format he or she provides. There are many styles of reports used by property inspectors, including the checklist, computer generated using inspection programs, and the narrative style.

Some reports are delivered on site and some may take as long as 4 – 6 days for delivery. All reporting systems have pros and cons.

The most important issue with an inspection report is the descriptions given for each item or component. A report that indicates the condition as “Good”, “Fair” or “Poor” without a detailed explanation is vague and can be easily misinterpreted. An example of a vague condition would be:

Kitchen Sink: Condition – Good, Fair, or Poor.

None of these descriptions gives the homeowner an idea what is wrong. Does the sink have a cosmetic problem? Does the home have a plumbing problem? A good report should supply you with descriptive information on the condition of the site and home. An example of a descriptive condition is:

Kitchen sink: Condition – Minor wear, heavy wear, damaged, rust stains, or chips in enamel finish. Recommend sealing sink at counter top.

As you can see, this narrative description includes a recommendation for repair. Narrative reports without recommendations for repairing deficient items may be difficult to comprehend, should your knowledge of construction be limited.

Take the time and become familiar with your report. Should the report have a legend, key, symbols or icons, read and understand them thoroughly. The more information provided about the site and home, the easier to understand the overall condition.

At the end of the inspection your inspector may provide a summary with a question and answer period. Use this opportunity to ask questions regarding terms or conditions that you may not be familiar with. A good inspector should be able to explain the answers to your questions. If for some reason a question cannot be answered at the time of the inspection, the inspector should research the question and obtain the answer for you. For instance, if the inspector’s report states that the concrete foundation has common cracks, be sure to ask, “Why are they common?” The answer you should receive will be along these lines: common cracks are usually due to normal concrete curing and or shrinkage. The inspector’s knowledge and experience is how the size and characteristics of the cracking is determined.

We recommend that you accompany your inspector through the entire inspection if possible. This helps you to understand the condition of the home and the details of the report.

Read the report completely and understand the condition of the home you are about to purchase. After all, it is most likely one of the largest investments you will ever make.

Contingencies in Real Estate Contracts

In real estate contracts the contingency is a common element. Contingencies are clauses in a contract that give either the buyer or seller a way to get out of the contract if certain conditions or timelines aren’t met. A commonly used example is that of a buyer making an offer on a new home before selling his existing home. The buyer needs to sell his present home before being able to get financing on the new one. So he makes his offer contingent upon the sale of his existing home. There will always be a time period associated with such a contingency. If the buyer is able to get his present home sold within that time period, the deal can go forward. But if he fails to sell within the specified time period, the seller has the option of getting out of the deal. In most cases, sellers won’t accept this kind of contingency, because they will most likely feel that they can find another buyer capable of closing the deal without needing to sell another home first. But new home builders are often willing to accept an offer contingent upon the sale of an existing home.

Every contract can be unique. The possibilities for contingencies are virtually endless. Some of the more commonly used contingencies would include:

• Financing - Contingencies that depend on the buyer being able to obtain financing are very common.
• Home Inspections - Probably the most common type of contingency is the “contingent upon satisfactory completion of inspection”. There are any number of specific types of inspection for which a contingency might be included in a contract. Some of the more common would include inspection by a qualified home inspector for hidden defects, pest inspections, water and sewage system inspections, inspections dealing with the presence of radon or mold, etc.
• Appraisal - It’s not unusual for a buyer to have a contingency that allows for a formal appraised value at or above purchase price. Since lenders will nearly always want an appraisal performed too, sellers usually don’t have a problem with this.

Remember, just like everything else in real estate contracts, contingencies are negotiable. Always take care before signing that you are comfortable with all contingencies included in your contract. Likewise, take time to think about what contingencies you might like to have added.

Are you contemplating buying your home in the Charlottesville Area and Central Virginia? Denise Ramey, Real Estate Agent can help.

Buying a home can be stressful for most people. However, with a little planning ahead of time, it’s not that complicated. So you know exactly what to expect, I like to supply my buyers with a road map of the whole deal. Here are my nine steps to buying a home.

Step 1 – Prepare to buy a home
There are several things you should consider before you start looking for a home. When you begin your search, you’ll want to make a list of items you want, get a feeling for what school districts you want to live in, and begin planning your budget. A good rule of thumb to follow is that your mortgage payment should be no more than a third of your net monthly income.

Step 2 – Communicate with a Real Estate Agentt in the Charlottesville Area and Central Virginia
That’s where I can help. We can plan a time to get together so we can talk about why you want to buy a home and get an idea of your plans for the future. We’ll discuss everything from neighborhoods, schools in the Charlottesville Area and Central Virginia, the mortgage and housing industries, to any other economic factors that could affect your purchase today or in the future.

In addition, I’ll help you get started on your loan. There are some very good mortgage professionals in the Charlottesville Area and Central Virginia, and I work with a lot of them, so you’ll be in great hands. They can assist you in deciding which type of loan is best for you and help you get approved.

Step 3 – Start house hunting
After our initial meeting, I’ll begin finding available homes on the market that are a great fit for you. I’ll research most of the houses and exclude the bad ones, and then we’ll set up appointments to view the homes when it’s most convenient for you.

As we view the houses, I’ll identify good features, as well as bad ones. I’ll even ask you what things you like and don’t like. It’s pretty common for buyers to amend their list of must-haves as we tour homes and some features become far more necessary than others. If that’s the case, I’ll look through all the listings once again and narrow it down to the home you’ve been wishing for.

Step 4 – Know the market
My awareness of the Charlottesville Area and Central Virginia housing market is a crucial benefit in your house search. I’m acquainted with all the neighborhoods and schools, and I’ll alert you to which districts are “hot” and call for prompt action and others that are “cool” and allow for more examination.

When we view homes, I’ll make sure to communicate when the seller’s list price has room for negotiation and also when I know the home is “priced to sell.” Any Real Estate Agent in the Charlottesville Area and Central Virginia will convince you they truly know the housing market, but take notice, and make sure you ask a lot of questions. If it appears they don’t know everything, just call me at 434-960-4333 or e-mail me at [email protected], and I’d be more than happy to answer any questions you may have. My market knowledge will keep you a step above the rest throughout the entire deal.

Step 5 – Find your dream home
I’m certain we’ll find your dream house in the Charlottesville Area and Central Virginia, and when we do, I’ll meticulously develop your real estate purchase offer. The offer will be written to suit your needs. Whenever necessary, I never forget to make contracts contingent upon items like acquiring financing and the results of the home inspection.

When turning in your offer, you’ll need to submit “earnest money.” This is a cash deposit given to a home seller to secure the offer to purchase the property, and it’s typically applied to the cost of closing. If your offer is accepted by the seller, we should close on the home about 30 to 60 days after. This allows plenty of time for your mortgage financing.

Step 6 – Negotiate
Unfortunately most contracts aren’t closed on the initial offer, and it’s pretty common to receive a counter offer. Don’t let this intimidate you. We’ll talk over whether or not to take the counter offer, present our own counter offer, or reject the seller’s offer and move on.

Market conditions will play a large role in how aggressively we negotiate the deal. We’ll also work within your financing constraints. And when it’s all said and done, we’ll assemble a contract that is best for you.

Step 7 – Get a loan
Once the contract is finished, you’ll start working with your lender to close the loan. If you’ve been pre-approved, this shouldn’t take very long at all, but you’ll need to keep in close contact with your lender. And I’ll handle all the property information your mortgage lender needs to close the loan.

Step 8 – Close the deal
You’ll get a Good Faith Estimate (GFE) outlining closing costs from your mortgage lender within three days of accepting your application. This estimate is based on the loan amount. RESPA requirements mandate that it has to involve all closing costs and be within a narrow range of accuracy, and I’ll go over the estimate and let you know if it all looks permissible.

Then we’ll close on your home. This will probably occur at a title company or escrow office and should be a smooth and comfortable affair.

Step 9 – Move in
Success! It’s time to move into your new home. Enjoy it. And if you need anything or have any questions, simply contact me at 434-960-4333 or send me an e-mail.

The first thing to understand about mold is that there is a little mold everywhere – indoors and outdoors. It’s in the air and can be found on plants, foods, dry leaves, and other organic materials.

It’s very common to find molds in homes and buildings. After all, molds grow naturally indoors. And mold spores enter the home through doorways, windows, and heating and air conditioning systems. Spores also enter the home on animals, clothing, shoes, bags and people.

When mold spores drop where there is excessive moisture in your home, they will grow. Common problem sites include humidifiers, leaky roofs and pipes, overflowing sinks, bath tubs and plant pots, steam from cooking, wet clothes drying indoors, dryers exhausting indoors, or where there has been flooding.

Many of the building materials for homes provide suitable nutrients for mold, helping it to grow. Such materials include paper and paper products, cardboard, ceiling tiles, wood, and wood products, dust, paints, wallpaper, insulation materials, drywall, carpet, fabric, and upholstery.

Exposure to mold

Everyone is exposed to some amount of mold on a daily basis, most without any apparent reaction. Generally mold spores can cause problems when they are present in large numbers and a person inhales large quantities of them. This occurs primarily when there is active mold growth.

For some people, a small exposure to mold spores can trigger an asthma attack or lead to other health problems. For others, symptoms may only occur when exposure levels are much higher.

Should I be concerned about mold in my home?

Yes. If indoor mold is extensive, those in your home can be exposed to very high and persistent airborne mold spores. It is possible to become sensitized to these mold spores and develop allergies or other health concerns, even if one is not normally sensitive to mold.

Left unchecked, mold growth can cause structural damage to your home as well as permanent damage to furnishings and carpet.

According to the Centers for Disease Control*, “It is not necessary, however, to determine what type of mold you may have. All molds should be treated the same with respect to potential health risks and removal.”

Can my home be tested for mold?

Yes. An indoor air sample can be taken as well as an outdoor sample to determine whether the number of spores inside your home is significantly higher. If the indoor level is higher, it could mean that mold is growing inside your home. Reliable air sampling can be expensive, time consuming, and requires special equipment and a qualified technician.

If you can see or smell mold, then you should take steps to clean-up the mold. Mold growth is likely to continue unless the source of moisture is removed and the contamination is cleaned-up.

How do I remove mold from my home?

First address the source of moisture that is allowing the mold to grow. Then take steps to clean-up the contamination.

There are cracks in the foundation. Nothing structural. Nothing that’s going to threaten the stability of the home, but they’re there. Nooks, crannies and holes through which seeps an invisible threat. Colorless, odorless and undetectable by your average human, it is none the less the second leading cause of lung cancer in the United States.

Radon gas – even the name sounds ominous, evoking images of radiation and nuclear devastation. Radon gas is created when uranium in the soil decays. The gas then seeps through any access point into a home. Common entry points are cracks in the foundation, poorly sealed pipes, drainage or any other loose point. Once in the home, the gas can collect in certain areas – especially basements and other low-lying, closed areas – and build up over time to dangerous levels. The Environmental Protection Agency of the US Government has set a threshold of 4 pico curies per liter as the safe level. As humans are exposed to the gas over a period of years, it can have a significant and detrimental effect.

How widespread is the problem? Radon has been found in homes in all 50 states. Certain areas are more susceptible than others (http://www.epa.gov/radon/zonemap.html), but no location is immune. Concentrations of radon-causing materials in the soil can be either natural or man-made. Homes built near historic mining operations may be at higher risk. The only way to tell for sure is to have a home tested.

Testing for radon comes in two forms: active and passive. Active devises constantly measure the levels of radon in a portion of the home and display those results. Passive devices collect samples over a period of time and then are taken away and analyzed. Either method can help you determine your level of risk. Do-it-yourself kits are available from a number of outlets, normally with passive devices. Over a period of days, the device is left in the lowest level of the home which is normally occupied. This eliminates crawl spaces under the house, but includes finished or unfinished basements. Then the results are analyzed by a professional. The other option is to engage a qualified professional to conduct the tests properly. The EPA web site (http://www.epa.gov/radon/radontest.html) provides information on finding appropriate resources and testing devices.

If high concentrations of radon are found in your home, you have several options. Since radon is only a problem when it is concentrated in high volume, improving the ventilation in an area is often sufficient to solve the problem. In other cases, it may be necessary to limit the amount of radon getting into the home by sealing or otherwise obstructing the access points. Once again, a professional should be engaged to ensure that the radon is effectively blocked. Typical radon mitigation systems can cost between $800 and $2,500, according to the EPA.

If you’re buying or selling a home, radon can be a significant issue. Buyers should be aware of the radon risk in their area and determine whether a radon test is desirable. When in doubt, the EPA always recommends testing. The cost of the test can be built into the house price. If test results already exist, make sure they are recent or that the home has not been significantly renovated since the test was performed. If in doubt, get a new test done. If you’re selling a home, having a recent radon test is a great idea. By being proactive, you can assure potential buyers that there is no risk and avoid the issue from the start.

So whether you have an old home or a new one, live in an old mining town or in the middle of the Great Plains, radon is a reality. But it is a reality that we can live with. Proper testing and mitigation can eliminate radon as a health threat. For more information, visit the EPA web site on radon at www.epa.gov/radon.

If you search for “bi-weekly mortgage” with an Internet search engine, you will be overwhelmed by the number of companies offering “Bi-weekly Mortgage Reduction Services” or “Bi-weekly Savings Programs.” Beware, you are entering dangerous waters.

Beware of Bi-Weekly Mortgage Reduction Services and Savings Programs

These “Reduction Services” and “Savings Programs” are charging you fees to “make a bi-weekly mortgage payment” for you. The enticement is that they will save you an impressive amount of money on your mortgage and reduce the number of years you pay on your mortgage.

The enticement is that they will make bi-weekly mortgage payments for you.

The real story is that they are not actually making bi-weekly payments on your mortgage. They are making bi-weekly deductions from your bank account. These funds are placed into an account from which your monthly mortgage payment is made (which only takes 24 deductions – but during the course of a year 26 deductions will be made from your account). With the extra 2 deductions, the “Service” makes an additional mortgage payment. In other words rather than making 12 mortgage payments, 13 payments are made.

The enticement is that they are providing a special service to you that would either not be possible for you to get on your own or that you won’t have the time or discipline to make it happen.

The real story is that you can easily make an additional mortgage payment each year. An easy way to do this is to have your mortgage payment automatically deducted from your account each month with an additional 1/12 payment to be applied to the principal amount. At the end of 12 months, you will have made an additional payment. And you won’t have to pay any fees to a “Service”.

Did You Know?

Making one extra mortgage payment a year will knock years off your mortgage and save you thousands of dollars.

How to Reduce Your Mortgage

One Additional Mortgage Payment a Year

There’s a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars. The trick is to make one extra mortgage payment a year and apply that payment toward your loan’s principal.

This is the method being used by “Bi-Weekly Mortgage Reduction Services” and “Bi-Weekly Mortgage Savings Programs”. Only, when you do it yourself, you don’t pay a third party unnecessary set-up costs and fees!

Example: $100,000 loan, 30-year mortgage, 6.5% fixed interest rate

One-time Payment

It may not be possible for you to increase your monthly mortgage payment. Keep in mind that most mortgages will permit you to make additional payments to your principal at anytime. Perhaps, five-years after moving into your home you receive a larger than expected tax return, or an inheritance or a non-taxable cash gift. You could apply this money toward your loan’s principal, resulting in significant savings and a shorter loan period.

Example: With a $100,000, 30-year, 6.5% fixed interest rate mortgage loan, the borrower will pay a total of $227,542.98 to pay back the loan in 30 years. That equals $127,542.98 in interest payments.

If the same borrower makes a one-time $5,000 payment the first day of year 6, he/she will pay a total of $204,710.75 and pay off the loan in 27 years (324 months). That’s a savings of $22,832.23 in interest.