Fannie Ends Bi-Weekly Mortgages, Still Ways to Saveby Tim Manni
Fannie Mae announced last week that they will no longer guarantee biweekly mortgages loans. According to Announcement 09-29, “Due to a lack of demand and increased operational costs, Fannie Mae is retiring the biweekly payment mortgage product…”
A biweekly mortgage allowed borrowers to make mortgage payments every two weeks, instead of once a month. The more frequent payments resulted in a borrower’s ability to pay far less in interest over the life of the loan. Merely because Fannie is no longer buying these types of loans doesn’t mean that they’re gone from the market. Many private lenders run their own programs, so check with your lender to see if they are available.
Still Ways to Save
If you’re looking for ways to save money on your mortgage but aren’t in the market to refinance, we suggest that you look into prepaying your mortgage. A single one-time lump-sum prepayment in the early years of your mortgage can not only trim your costs, but it can carve years off your mortgage term. “One extra mortgage payment per year has almost the same effect on costs as a biweekly does,” said HSH VP Keith Gumbinger.
Even adding as little as $10 per month to your current payment can save you thousands of dollars in interest.
Below is a graph shows how much you can save by prepaying:
Click here if you’re interested in ordering HSH’s booklet on “Prepaying Your Mortgage.”