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Mortgage Payment Options that are available to you…Monthly and Semi-Monthly (along with No Money Down Mortgages)

Guest post by: Brian King

Article Overview: As soon as someone gets approval for a mortgage and they use this money to purchase a home the thing that is constantly on their mind is paying off this mortgage. It is like a disease or a sickness but one that you really can’t avoid.

Mortgage Payment Options that are available to you…Monthly and Semi-Monthly (along with No Money Down Mortgages)

As soon as someone gets approval for a mortgage and they use this money to purchase a home the thing that is constantly on their mind is paying off this mortgage. It is like a disease or a sickness but one that you really can’t avoid. As soon as you have a mortgage you want to start to get rid of it. And the only way to do this is to pay it off using some other financial means...

The truth is that unless your last name is Rockefeller or Gates, or unless you are lucky enough to win the lottery, or talented enough to create a great musical band, or you are smart enough to invent the next best product, or you are savvy enough to start a great business where you end up making millions of dollars and can buy real estate straight up…chances are that you are going to be like everyone else who needs to use a mortgage in order to make a big purchase like a home.

One major aspect of mortgages that sometimes does not get enough attention and focus are the different mortgage payment options that exist out there. Not every lending institution works the same way and not every mortgage they give works the same way either. There are actually a lot of different mortgage payment options that exist out there for borrowers.

Anytime you make a payment on your mortgage you are paying off a portion of the principal along with a portion of the interest accumulated. The balance that is owing will determine how much you are charged in interest every month. As your mortgage begins to amortize (as the balance outstanding reduces over time) less of your payments go towards paying off interest and more goes directly towards paying off the principal; with your ultimate goal being to eventually completely pay off your mortgage and getting the monkey off your back so to speak. With this process there are a number of payment options available to you. (And also it is important to mention that any additional payment you make on your mortgage over its lifespan will end up saving you a lot of money in interest.)

On the whole, lending institutions will offer you a couple of different choices when it comes to your mortgage payment options. One such option is in regards to the frequency of your payments.

The most common form of payment frequency is the monthly option, such as making a standard payment on the 1st, 15th, or 30th of every month. This makes the payment schedule very easy to remember, especially if you are used to paying rent. So if you pay for example, $1,200 a month, than you will do this every month on that certain date (the 15th for example) for twelve months, paying off a total of $14,400 a year.

Another mortgage payment option that is quite popular is the semi-monthly option. In this situation payments are actually made twice a month, usually on the first and the fifteenth of each month. With each of these payments being half of what the monthly amount is set to be. So for example if your monthly payment is $1,200 (which would account to $14,400 for the year) with the semi-monthly option you would pay $600 twice a month, which still equals the $14,400 (24 X $600). This option ends up working out so that you are paying the same amount every year that you would if you chose the regular monthly option. However, you would end up paying off your mortgage a little bit quicker and you would save on some interest as well. Some people chose the semi-monthly option because it splits up the monthly payment into two payments which is often easier for people to handle in regards to their income and their paycheck schedule.

See the example below to see the comparison between monthly, semi-monthly, and bi-weekly payments.

	Monthly	Semi-Monthly	Bi-Weekly	Weekly
Payment	1000	500	500	250
Years (amortization period)	25	24.92	20.58	20.5
Interest Paid	157227.49	156085.48	124238.29	123850.05
Interest Saved	0	1142.01	32989.20	33377.44

Another payment options that is rarely talked about but is becoming more and more available in these rebuilding economical times (especially when it comes to the real estate market) includes the concepts of “no down payment mortgages.

I had never personally heard of anyone not having to put down money when purchasing a home until recently my younger cousin, who is an Industrial Engineer and business owner at the age of only twenty-two, bought a house with a no down payment mortgage. He bought a $130,000 home without putting any money down. The only large stipulation I remember him mentioning was the fact that he would have to keep the home without selling for at least five years or he would have to pay some kind of penalty.

The truth is that there are a few lending companies out there in Canada who are offering these no money down mortgages. But this is not an option just offered to anyone. In order to receive this offer you must have a number of prerequisites involving your employment and credit standing such as never having gone bankrupt, having a good credit rating itself, no worse than one month’s late payment on a credit card in the last two years, two years of work in the same line of work and a minimum of six months in the same company are all some examples. This option makes it easier for people who are having trouble saving a lot of money to make a large down payment towards a home.

Overall, there are a lot of payment options available to borrowers. The key is to contact your lending institution or to ask a lot of questions to your broker during the mortgage process. You can always change things up as you go in order to pay off more towards this looming debt and help to reduce the headache it often provides.

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Article Tags: Canadian Mortgages, home equity loans, mortgage payment, mortgages, payment options
Referred by: http://www.searchengineworkshops.com



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