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Instead of making 12 monthly payments in a year, the equivalent of 13 payments are made, with the 13th payment being applied
entirely toward reducing the unpaid balance. Through this program, a 30 year mortgage is paid off in 22 years, 9 months.
If the home loan was $100,000 at 8.5% interest, the savings to the member would be $50,650.24.
MPAP is a biweekly mortgage payment program that electronically debits homewowners' accounts every two weeks through the
Automatic Clearing House (ACH) system by participating FDIC banks in the Federal Reserve System. The biweekly debits are
equal to at least one-half of the real property owner's existing mortgage payment. Thus, if the monthly mortgage payment
is $1,000, then $500 would be debited every two weeks. Through this method, 26 payments are made over the course of the year,
equivalent to 13 monthly payments rather than 12. All of the extra payment is applied exclusively toward a reduction in the
principal of the mortgage. For example, with an average $100,000 mortgage for 30 years at 8.5% interest, by making a regular
monthly payment, a homeowner would pay $176,807.60 total interest. With a biweekly payment plan, he would not only reduce
the term by 7 years, 4 months, he'd pay only $126,157.07 in interest - a savings of $50,650.53.
There is no change in the existing mortgage. There is a fee for initiating, processing and administering the biweekly
automatic debit service, but because this is not a financing or refinancing of a mortgage, there are no charges such as refinancing
costs, closing costs, appraisal fees, etc.
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