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When you set up your mortgage payment repayment plan, you can choose between a standard repayment plan or a bi-weekly repayment plan. With the standard plan, it would take you 30 years to repay the loan while a biweekly plan will take 23 years and 8 months. This will save you 6 years and 4 months. But, the savings doesn’t end there. If you took out a $270,000.00 loan with an interest rate of 7.000% and your federal tax rate is 28.000%, you can expect to pay $1,796.32 per month, while a bi-weekly payment plan will call for a payment of $898.16 every other week. As a result, you will pay only $282,273.00 in interest with the bi-weekly schedule rather than $376,674.03 with the standard payment plan. While this will result in a loss of $26,432.29 in tax benefits, you will still save a total of $67,968.74 with the bi-weekly plan.
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