Bi-weekly mortgage
payments
So you heard
biweekly payments will save you on the interest you pay on your
mortgage and lower the years it takes to pay off your house? This
is true. If your goal is to pay off your home in a shorter period
of time then it makes perfectly good sense. Save money, save
years.
I won't bore you with the amortization schedules and formulas.
Simply put, it works. The reason biweekly payment works is
because your balance is computed (re-amortized) every two weeks
figuring the lower balance every two weeks. Bottom line is when
you make bi-weekly mortgage payments you are in essence making 26
bi-weekly payments per year and if you look at the simple math 26
divided by 12 months equals 13 payments. Yes, you are making an
extra payment per year.
BI-WEELY MORTGAGE PAYMENT CONSIDERATIONS
Okay, so here are
the considerations you should make regarding biweekly payments.
Do you want to give control to your lender to access your checking
account? Are you sure you can stick to a forced biweekly
mortgage plan for the time it takes you to payoff your
house? Do you want to pay the set-up fee for biweekly
payments? If you answered yes to all of these then by all means
go for it.
DO IT YOURSELF BI-WEEKLY
MORTGAGE PAYMENTS
You can benefit
from bi-weekly mortgage payments by doing it yourself and keeping the
lender off your checking account. Simple. Send in an extra
payment per year. Or take your monthly payment and divide it by
12 and send in an additional principal reduction payment equal to that
amount. If your payment is $1200 per month you would send in an
additional $100 (1200 divided by 12 = 100). The extra $100
principal reduction will save you a ton of money if you stick to it
long term. I like this last option the most because it's nearly
as good as the bi-weekly payment option. The main reason is that
you will have more options and you won't give up control and if you
sell your home or you need to refinance again it won't be a
hassle.
MORE BIWEEKLY
MORTGAGE PAYMENTS THOUGHTS
There are instances
when a biweekly mortgage payment does not make sense. To find out
your best options regarding this financial consideration you should
seek the advice of a professional mortgage
broker.
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