Articles - Archived Money Matters

(Copy and paste the text into your document)

Restructuring Mortgage Payments

If you are making a mortgage payment, chances are it's 12 times a year. Assuming you have a 30-year mortgage, that's 360 payments over the life of the loan.

If you desire to shave off a few years—and your budget allows—consider restructuring how you pay off the loan so it coincides with your pay schedule. If your current plan works for you, don't change a thing! However, you may be surprised at the difference it can make if you set aside a little extra money with each pay period. Your Share or Money Market Share Account is a great option for this type of goal planning.

Let's say your mortgage balance is $150,000 with a 5.5 percent interest rate and monthly payment of $852. The annual obligation equates to $10,224 ($852 x 12). If you considered making one additional payment per year, it could shave off more than four years over the life of the loan!

You can determine the extra amount you need to save to make this additional payment by using the table below. The best way to determine this amount is to break your mortgage payment into smaller pieces. Not only does this help you budget for the lump sum payment of $852, but the extra can really make a difference.

If you are paid: Your mortgage obligation broken down by pay schedule: Make an extra payment a year by setting aside (and applying):
Weekly $197 x 52 = $10,224 $16.38 extra a week
($852 / 52)
Bi-Weekly (every other week) $394 x 26 = $10,224 $32.77 extra every other week ($852 / 26)
Semi-Monthly (twice a month) $426 x 24 = $10,224 $35.50 extra twice a month
($852 / 24)
Monthly $852 x 12 = $10,224 $71 extra a month
($852 / 12)

The examples above do not include escrow (homeowners insurance and property tax).

If you desire to save even more money, consider bringing your mortgage to LGFCU, where we may be able to lower your interest rate and payments. Give our Financial Wellness staff a toll-free call at 877.367.5428.