Episode Summary: In this episode of "Financial Advisors Say the Darndest Things," host AB Ridgeway uncovers a deceptive practice by mortgage companies that prevents homeowners from saving on interest. As a Certified Private Wealth Advisor®️ professional, AB shares his insights and offers actionable advice to help you navigate these challenges and save money on your mortgage. Tune in to learn how to protect your financial future from these unscrupulous tactics.

Key Takeaways:

Mortgage Company Tactics: AB Ridgeway exposes how mortgage companies make it difficult to switch from monthly to bi-weekly payments. This strategy forces homeowners to pay more in interest over the life of the loan. He highlights the deliberate obstacles set by companies to keep you paying more.
Understanding Unapplied Funds: AB explains the concept of unapplied funds, where mortgage payments are held in a separate account until the full amount is received. This tactic prevents partial payments from reducing the principal, causing homeowners to accrue more interest unnecessarily.
The Importance of Principal Payments: Making principal-only payments is crucial. AB advises homeowners to take control by manually making extra payments toward the principal. This reduces the total interest paid over the loan’s term and accelerates mortgage payoff.
Challenges with Bi-Weekly Payments: Switching to bi-weekly payments can be beneficial, but mortgage companies often create barriers. AB recounts a client's struggle with this process, including issues with account numbers and additional documentation, underscoring the need for persistence.
Strategies to Save on Your Mortgage: AB shares practical steps to overcome these challenges, such as making one extra payment per year or dividing your monthly payment by 12 to add to each monthly payment. These methods can significantly reduce the interest paid and shorten the loan term.

Quotes:

"Mortgage companies are lying about your mortgage payment and they're taking money right out of your pocket."
"The reason we have bi-weekly payments is because every dollar that goes to principal doesn't accrue interest."
"How greedy can you get that you limit how people pay you so you can make more money?"

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