My friend who used to work at a mortgage company recommended I pay mortgage twice a week, with half of what a monthly mortgage payment would have been. So instead of paying $1000 a month, we pay $500 every two weeks. He said we can save half of the interest in the long run, but most mortgage company don't like to advertise it because they lose their interest income in the long run. This makes perfect sense in theory.
However, I'm surprised that I haven't heard any real estate investor doing this. What's the catch? Why aren't you doing it? Or is it because I don't have enough investor friends 😅
That is a way to save on interest over a 30 year note. In my opinion, the reason its not a well known option is because most will refi every 5 years or so often, which resets the amortization schedule.
It’s no secret, or great trick. Any time you pay extra on a mtg you pay it off early. In case you didn’t realize......when you “pay half the monthly payment every two weeks”......there are 52 weeks in a year so you are making 26 half payments, or 13 full payments.....hence the savings because you are making one extra full payment per year, which is where the savings come from, not because you are paying every two weeks instead of once s month.
Without prepayment penalty many op to get 15 year mortgages. Those conservative investors all pay more than required. I am aware many investors who are mostly paid off with homes purchased last 10 years or earlier. One investor/realtor I spoke to yesterday told me she paid off 4 mortgages from positive cash flow rental income and have one left with $410K with a portfolio of 5 properties. Some take a HELOC and use it as next investment source.
You aren't saving in interest, you're just basically making 26 half payments (or 13 full payments) which ends up being one extra payment that goes towards the principal a year.
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