If you want to pay off your mortgage faster, biweekly payments may be the way to go. Not only will this reduce years off your loan term but it will save money in the long run as well.
Before making any extra payments, be sure to consult your lender first. Not all lenders have sophisticated online systems, so they might only apply the extra payments once you’ve paid enough for a full monthly payment.
Less Interest Paid
Paying your mortgage biweekly can result in less interest being paid over the life of your loan, saving you money and helping to reduce its balance faster so that you can own your home sooner.
Before deciding whether biweekly payments are the right option for you, it is important to assess your financial situation and goals. Doing this can help determine if making these payments part of a broader strategy will benefit your overall plan, as well as any savings objectives you may have.
Paying your mortgage biweekly could potentially reduce any potential prepayment penalties that apply. But be sure to speak with your lender first before making this commitment.
There are also third-party payment services that claim to offer biweekly mortgage payments in place of your original lender, but these may charge fees and not guarantee payment every two weeks. They could be a viable solution if you have the budget for it; however, be sure to do extensive due diligence before agreeing to anything.
Shorter Loan Term
Biweekly payments can help you reduce your loan term and finish paying off your mortgage faster, saving thousands of dollars in interest payments over time.
The only drawback to paying your mortgage biweekly is that it takes up a large portion of your disposable income annually, potentially hindering other financial goals. On the other hand, if you receive an unexpected windfall like a year-end bonus or tax return each year, paying your mortgage biweekly could be worth the additional expense.
As a homeowner, you understand the value of your home as one of life’s most precious possessions. Having more equity in your house can be an incredibly powerful source of wealth and financial security for you and yours.
Less Administrative Effort
Paying your mortgage biweekly can save you money in the long run and help keep track of your monthly payments. Not only is this a wise idea for budgeting purposes, but it can also encourage you to get into the habit of paying your bill each and every month – something which may be difficult when living paycheck to paycheck.
On the downside, your mortgage servicer may not appreciate you making a partial payment and may charge an extra fee for doing so. This is especially true if you use a third party to administer your biweekly payments.
The crucial question is: Does biweekly mortgage payment make sense for you and your family? Before making a change, be sure to explore all available payment options and shop around for the best rate possible.
Fewer Monthly Payments
If you have a conventional mortgage, paying your loan biweekly instead of monthly can significantly reduce the amount of interest paid over its life. In fact, it could even cut years off your loan term!
Biweekly payments on your mortgage can save you thousands of dollars in interest by shortening the time it takes to pay off your loan. Furthermore, making two payments each week also helps build equity in your home and eliminate private mortgage insurance (PMI).
The disadvantage to this strategy is that it may be difficult for borrowers on tight budgets to make additional payments toward their loan each year. Depending on your risk tolerance level, you may wish to steer clear of this strategy altogether.
Some lenders accept biweekly payments, but be sure to read the details carefully to guarantee they accept this option and don’t charge you an additional fee for it. Furthermore, be sure to read through your loan agreement’s terms and conditions thoroughly so you aren’t subject to any early repayment penalties.