mortgage question for the mathematically challenged

[sumarie]

Hi all,

My sweetie & I have a mortgage we are aggressively paying off. At present we
owe $148,000, at 4.25 interest & our monthly payments are $737.93. We have been
paying $1000/month. Suddenly we got the idea that instead of paying monthly, we could pay weekly. Or, even daily. I've been trying to figure out what the monthly savings would be with each of these scenarios. My so-called "common sense" thinks that paying daily would save us money, but I am either making math errors, or I'm totally wrong in my assumptions. I'm confused, and am trusting someone on this forum will be able to set my thinking straight, (she says hopefully). Thanks in advance!

[Zoebird]

biweekly should be fine. it will pay down the principal faster. paying daily would probably get to be too much accounting (for you and them -- even if automated), and so going biweekly should do the job.

we were doing biweekly before we sold our house (our house was 1/2 way paid off, and had doubled in value, and retained 90% after the market bubble burst, and thus allowed us to move to NZ).

[jennipurrr]

It depends on how your mortgage interest accrues (likely daily). You will want to be careful that these extra payments are applied to principal. Also, the mortgage company many have a max limit for number of payments per month. I would go with biweekly as you will chop off a little interest and also benefit from two extra payments per year (I believe) over monthly but it seems like it would be an easy routine to get into.

My credit union is a pain, so even though we pay extra, we do so in one monthly chunk.

[Zoebird]

i'm sorry your credit union is a pain. ours is super-tremendously awesome.

[jennipurrr]

I really like them actually, but we have a business account there and then the mortgage, but not our personal bank account. They don't have it online where I can make a payment from another bank. So, what we end up doing is withdrawing the cash from our reg bank, walk two blocks to the credit union and pay the mortgage. I wish they would just have something online where I can pay from any bank. I suppose we could write a check, but the banks are both right near my office so its not a big deal to make one payment a month. Multiple payments would be a hassle though.

[sumarie]

Thanks for your thoughts, Zoebird & jennipurr. I will add a couple more pieces of info. Our credit union
is The Best, and we can make online payments whenever we wish, with no penalties & we've been assured
it doesn't matter how many we make. One person there mentioned that at this moment the interest amount
per day amounts to $17.40 some cents. So we reasoned that if we were to allot the $1000 per month into
equal daily payments, we'd be paying something like $34/day all month long. Each day $17 would go towards
interest & the remainder toward principal.

So, slogging through the math process & trying to see for myself, I laboriously took $148,000 x 4.25 divided by
365 and came up with a figure which I then subtracted from the $148,000. Then, with this new figure, I repeated
for 28 days. At the end of 28 days, I compared this figure to the figure I got when I worked with a weekly form.
And, unexpectedly, the weekly turned out to be a more thrifty way to go (unless, of course as mentioned, I'm
Missing Something!). (sorry I don't have the exact numbers here, no calculator, but hopefully you understand
my drift).

We were told about the making an extra payment per year, and also paying 2 times per month instead of just one,
but I'm just trying to see if we can tweak it even more. And also, I'm not understanding why the daily idea doesn't
seem to be as I thought it would be -- the thriftiest.

More insight, anyone?