Mortgage Cycling vs Bi-Weekly Payments
With all the buzz and advertising on the Internet about Mortgage Cycling - here are some facts to consider before starting the mortgage cycling plan . . .
You can always payoff your mortgage quicker by just making one extra mortgage payment a year that is marked for an extra principal payment. When sending that extra payment make sure that you request the entire payment goes toward your principal. Plus you can send extra money each month towards your principal. This plan does not cost you anything to setup as the biweekly plan. The best time to setup your bi-weekly loan payment plan is at the start of your mortgage, otherwise you have to pay to setup the plan later. We suggest you ask a good mortgage broker about mortgage cycling before you proceed.
Discover The New Equity Building Plan That Blows A Biweekly Away! What is it? Mortgage Cycling. That's the promise anyway. Mathematically, Mortgage Cycling does work. However, there are a lot of things that look better on paper than they really are. Here's the secret to Mortgage Cycling - Your equity isn't necessarily built using surplus (as advertised) cash but rather by making huge lump payments every 6-10 months against your loan principal balance by taking out a Home Equity Line of Credit. Meaning - Mortgage Cycling is only for those who have at least a few hundred dollars in surplus cash at the end of each month. Otherwise, your robbing Peter to pay Paul. Your taking out a loan to repay another loan.
For most people, Mortgage Cycling relies on using a Home Equity Line of Credit to make huge large pre-payments against your original principal mortgage balance. When you take out a home equity line of credit, you pay for many of the same expenses as when you financed your original mortgage such as an application fee, title search, appraisal, attorneys' fees, and points. You also may find most loans have large one-time up front fees, others have closing costs, and some have continuing costs, such as annual fees. And there is a downside even if you have the surplus cash for Mortgage Cycling. If money gets tight, you could lose your home.
Home equity lines of credit require you to use your home as collateral for the loan. This may put your home at risk if you are late or cannot make your monthly mortgage loan payments. If you sell your home, most plans require you to pay off your credit line at the time of your closing.
The promoters of Mortgage Cycling are correct. Biweekly payments without the additional payment can not compete with Mortgage Cycling. However, if you have surplus cash for mortgage recycling, investing that cash in the biweekly mortgage payment program will save you just as much without the risk of losing your home.