H & P Capital Investments LLC
Issue 36
June 2008
Best Way to Pay Off a Note Early
by Tom Henderson

One of my readers asked me this question, "Is converting my conventional mortgage to a Bi-Weekly Plan the best way to pay my mortgage off early?" I always ask, "Is this my only choice?" This is not only a time value of money question, but also a question of how time consuming, and the difficulty of setting up a bi-weekly schedule, as compared to other methods of paying off your mortgage early. As with any time value of money question, your calculator will help you make a decision. Let's look at a typical mortgage 15 year note, and compare different methods of paying of the mortgage.

Loan Amount : $200,000
Date of Loan : 1/01/08
Interest : 8%
Payment Amt : $1,911,30
First Payment : 2/01/2008
# of Payments: 180
Total Payments: $344,035
Total Interest : $144,035

Loan Amount : $200,000
Date of Loan: 1/01/08
Interest : 8%
Payment Amt : $955.65
First Payment : 1/15/2008
# of Payments: 336
Total Payments : $321.225
Total Interest: $121,225

No doubt the Bi-Weekly will save you money, but let's look at it another way.

Let's break it down to yearly data.
$955.65 X 26 = $24,847
$1,911.30 x 12 = -$22,936
Extra Yr Payment : $ 1,911

Under the Bi-Weekly you make the equivalent of one extra monthly payment a year.
Let's divide this extra year's payment by 12 months = $159.29
Add to the regular monthly payment of $1911.30
Total real monthly Payment $2,070.59

If we put this new data into our calculator, we discover the total number of payments has been reduced from 180 to 156.

By adding $159 to monthly payment of the conventional mortgage the total payout is $321,800 by the end of its term. The total bi-weekly payout remains $321,225 by the end of its term. This is only a $575 difference when all is said and done.

Now you have to ask yourself, "Is it worth the time and trouble to make all those extra payments to save only $575 over 13 years?" Also, be aware that paying every two weeks means there are going to be some months where you have 3 payments. (Bi Weekly is NOT the same as twice a month)

For me, I would rather just have the option of making $159 OR MORE a month extra on my monthly payments, rather than being bothered to have to write a check out every two weeks. This is not to mention if things get tight, I can always just make my regular monthly payments and still keep my credit in good standing. On a biweekly schedule you do not have this option.

For a little calculator practice play around with making a full extra payment once a year. This will amaze you as to how fast your loan gets paid off. The wonders of compound interest and the time value of money can work for you or against you. Those who understand the time value of money collect interest; those that do not pay interest. If you have a topic you want to discuss, or have a note to sell, please "contact me".

If you have a question on your note or a Note to convert to cash, contact me
I will be happy to discuss your specifics.

Copyright H&P Capital Investments LLC
All rights reserved

Tom Henderson-Note Broker/Mentor Program
note deal

My announcement last month about my "mentoring" those who want to learn the note business had a tremendous response. I know those who are participating will follow through. Everybody wants to know "where do you find notes"? The most direct way is to contact note holders. I will furnish you with a list of note holders and addresses at no cost to you and you do the mailings. When you get a response, simply bring the note to me. We will work together and you will learn the note broker process. If the note fits the parameters of my note investors and is purchased , we will split the broker fee 50-50. You will earn while you learn. Hopefully after we have done a few deals, you will be ready to "solo", with my blessings and encouragement. The only expense will be the cost of your letters and postage. Because of the large response, I am having to limit my time to those who are really serious about the business and will follow through. If you are interested contact me for details.

Click to Contact Tom
New Ebook Format
Note Professor Notebook
hp note gra

I have gotten several requests to have THE NOTE PROFESSOR NOTEBOOK available in ebook download form on my web site with a lower price of $39. I am considering the idea, but I would like a little feedback if this would interest you at this price and in this format. Please "contact me" and just give a short comment.

Note Professor Notebook
by Tom Henderson

If you have not attended a Note Professor "How To Get Rich with Notes" class, be sure and purchase the Note Professor Note Book manual to enhance your knowledge of creative real estate financing and note buying and selling.

"I got your news letter. It was great, purchased your (Notebook) and it was awesome. I used your renter technique and it worked also. I am getting 41% return thanks to your expert advice. I have spent hundreds and not able to do any thing thru other gurus" Gary W. Garland, TX

"It blew me away what a powerful tool notes can be. Lots of great information, worth every penny! Highly recommended."
Jeff C. The Colony/Investor

"Your manual is short and straight to the point, it's rare to buy something today that gives you your money's worth. Thank you" Stephan B. Phoenix, AZ

GUARANTEE! You will learn at least one new usable concept to increase your profit in buying or selling notes and real estate.

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Tom Henderson
H&P Capital Investments LLC