Frequently Asked Questions about
Starting Your Biweekly Mortgage Reduction Plan
Finding Money to Make Two Mortgage Payments
Next Month to Get the Program Started
If you’re worried about robbing Peter to pay Paul (taking money out of your kids’ college fund that grandma set up to pay the advance payment required to initially set up your biweekly savings program), let your mind rest at ease. Because any money that you pay towards your principal can be pulled out just as easily via an equity line.
The money locked up on your home is as liquid as the money in your checking account. With an equity line, you’re issued both a checking account and a draft card that you can use to take the equity out of your home.
- What is an Equity Line?
- An equity line is a form of mortgage that you do not pay on until you use it. It’s more or less like a line of credit against the equity in your home.
- How do You Qualify for an Equity Line?
- Normally, your credit score is not an issue. If you have ample equity in your home, you qualify. It also may not be necessary for you to have a full-blown appraisal. Some banks will issue equity lines on just a drive-by appraisal and some will not even charge you for this service.
- How Much Money Can You Get From an Equity Line?
- Traditional equity lines are issued on 70% loan to value (if your home is worth $200,000 and you have a mortgage of $100,000, you would qualify for a $70,000 equity line ... 70% of the $100,000 equity you have in your home).
- Where Do You Get Equity Lines?
- Banks issue equity lines as well as some credit unions.
- How Much Does an Equity Line Cost?
- Some institutions offer them for free; however, you can expect to pay around $300 in administrative and drive-by appraisal fees.
- How long does it take to get an Equity Line?
- Plan on two to ten days, depending on how fast a drive-by appraisal can be arranged.
- What Are the Terms of an Equity Line?
- You pay only on what you use or spend. Interest on equity lines fluctuate with the prime rate or T bill rate. The higher the prime, the more interest you pay. Each month, you must pay at least the interest and a small portion of the principal (normally amortized over 15 years).
Conclusion
Since you’re not spending money, just saving money, and you’re getting an equivalent 9% or better return on your money on top of that, the money is liquid. You can justify pulling money out of just about any savings vehicle you have (including withdrawing money from your IRA, 401K, children’s college fund, etc.) to make the advanced mortgage payments required to get the ball rolling.