Biweekly mortgage payments result in one extra loan payment each year. And so, by moving to a biweekly mortgage payment schedule, you can save thousands of dollars in interest and considerably shorten the time it takes to pay off your mortgage.
Most homeowners dream of paying off their mortgage early. One way to achieve this goal is to pay half your monthly mortgage every other week. Making biweekly mortgage payments can shave years off your loan and save you thousands of dollars in interest.
Make sure your lender accepts biweekly payments and will credit you appropriately for your payments before implementing this strategy.
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How Do Biweekly Mortgage Payments Work?
Biweekly mortgage payments have a straightforward concept: you pay half of your monthly mortgage amount every two weeks rather than the entire amount all at once.
The magic of this biweekly payment strategy lies in the calendar. There are 52 weeks in a year, and if you pay twice monthly, youd make 24 payments annually. Paying every two weeks, on the other hand, allows for 26 total payments. As a result, the biweekly method results in the equivalent of one extra monthly full payment each year.
When you make biweekly mortgage payments, you may save money on interest in two ways:
- There will be less of a balance to compute interest if you make more frequent payments to reduce your principal balance.
- Early mortgage payoff may allow you to avoid paying interest for a number of years.
Can You Pay Your Mortgage Biweekly?
Your lender must consent to immediately crediting half of each monthly payment toward the loan if you want to increase your home equity more quickly. Unfortunately, not all lenders accept biweekly mortgage payments. Make sure your lender accepts biweekly payments before starting to make extra payments, and then apply the extra money to your principal. Also, verify if there are any fees for modifying your payment schedule.
Remember that some lenders withhold partial payments until they receive the entire amount owed on your mortgage, failing to credit them to your account. In this case, you wont save as much in interest since these payments are not instantly applied.
Biweekly Mortgage Payments vs. Monthly: Which Gets You Mortgage Free Faster?
FAQ
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