It is generally said that when mortgages are paid every week, bi_weekly or semi-monthly, the borrowers save thousands of dollars in the form of mortgage interest. This is true, but only to a certain extent as you don't always save lots of money by making mortgage payments in the above mentioned manner. People who are not aware of the dealings in the mortgage scenario may be taken by surprise when they find that the above mentioned methods are not always effective. The fact is that just because you are paying the mortgage interest sooner than the normal monthly arrangement, you will be saving lots of money. What is actually more important is the agreement between the lender and the borrower on the mode of repaying the money. Most lenders do not follow any set system or rules in this regard or how the interest should be worked out. Instead, they offer the borrowers three different categories of paying the mortgage speedily. These three systems are listed below.
The accelerated payment mortgage fulfills the desires and expectations of the borrower. In this system, both the charge of the mortgage investments as well as the time required to repay the amount are lowered considerably. In this type of mortgage arrangement, the borrower agrees to pay the regular monthly payment as well as an additional monthly payment every year. The money from the extra payment is utilized to reduce the remaining principal. Consecutively, payment of the additional monthly interest each year reduces the overall interest that is due for the mortgage.
The regular payment mortgage category is a poor choice for the borrowers and they usually achieve little from this type of payment arrangement. However, the borrower need not have to make any additional interest payment to the lender every year. In this category of mortgage payment, the normal yearly payment is split into small amounts and hence it is not beneficial for the borrowers as it does not help them to save a great deal of money.
The minimum amortized (pay-off) weekly payment mortgage is not anything else, but a rearrangement of the deck. According to this system, the mortgage interest is paid every week, bi-weekly or semi-monthly and the total recompense is worked out on the basis of a 25-year amortization or repayment. In fact, this system of repayment is the most ineffectual category of fast-pay mortgage.