Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10.2 9/5/84; site mot.UUCP
Path: utzoo!utcs!mnetor!mot!fred
From: fred@mot.UUCP (Fred Christiansen)
Newsgroups: net.consumers
Subject: Re: Re: Semi-monthly mortgage repayments
Message-ID: <460@mot.UUCP>
Date: Thu, 21-Nov-85 16:50:39 EST
Article-I.D.: mot.460
Posted: Thu Nov 21 16:50:39 1985
Date-Received: Fri, 22-Nov-85 13:18:09 EST
References: <1389@decwrl.UUCP> <412@tekcbi.UUCP>
Organization: Motorola Microsystems, Tempe, AZ  85282
Lines: 33

> I have read so many different answers to the original question, that I
> am totally confused about the whole thing.  Am I the only one???? or did
> I just happen to fall off a turnip truck |-).??????
>
> I am still confused.  My gut tells me that you can pay it off
> in less than 29 5/6 years but certainly more than 12-18 yrs.  I would
> imagine it to be somewhere around 25 years.  But, I am not a financial
> person.  
> What we need now are no more "I Think"'s but some real examples of
> how it works, itemized out so we can understand it.

ok.  here goes.  let's compare 1) a $95000 mortgage at 12% interest
with $1000/mo payments (these were easy numbers to pull out of my head)
versus 2) the same thing but with $500 bi-weekly payments.  since the
program i wrote deals only in months, let's convert those $500 bi-weeklies
into equivalent monthlies (note that this is being *very* conservative;
actual results are slightly better due to interest computation).
that computes to equivalent monthly payments of $1083.33.

per my results(*), the bi-weekly approach saves you $70,000+ and pays off
your mortgage in ~8 fewer years.

(*)
1) ((25 yrs * 12 months) + 1 month) * $1000) + $68.93 = $301,068.93
2) ((17 yrs * 12 months) + 6 months) * $1083.33) + $589.06 = $228,088.36

on a mortgage where the payments where computed to actually run 30 years,
the numbers you'd get would be even better than these.
-- 
<< Generic disclaimer >>
Fred Christiansen ("Canajun, eh?") @ Motorola Microsystems, Tempe, AZ
UUCP:  {seismo!terak, trwrb!flkvax, utzoo!mnetor, ihnp4, attunix}!mot!fred
ARPA:  oakhill!mot!fred@ut-sally.ARPA          "Families are Forever"