Are Biweekly Mortgages Really Worthwhile?

You may have got heard people, especially mortgage lenders, extolling the virtuousnesses of fortnightly payments, saying that you can salvage thousands of dollars and take 5-7 old age off your mortgage--and then offering to put up a biweekly program for you for as small as $400. But you don't have got to pass $400 to get economy money and clip on your mortgage. In fact, you don't have got to pass anything at all! You can put up a money-saving mortgage payment program yourself--easily and at no extra cost.

The cardinal is to look carefully at the mulct black and white in many fortnightly plans. You happen that even though you'd be making biweekly payments, the lender may only post them to your account on a monthly basis, which intends that you wouldn't be economy anything on interest, because mortgage interest is paid in arrears (as opposing to lease payments, which are paid in advance). Your lone existent nest egg would be in the fact that you'd be making the equivalent of one extra payment a year. That’s A good thing, of course, but you don't need to pay person $400-500, possible monthly care fees, to be able to carry through the same results.

Here’s how biweekly payments save clip and money: By making biweekly payments, you actually stop up making an extra monthly payment each year. Over the course of study of a year, you'd do 26 payments (one every other hebdomad for 52 weeks), which is the same as making 13 monthly payments. Making one extra payment per twelvemonth will shorten the life of your loan and salvage you thousands of dollars.

But you don't have got to do biweekly payments to obtain those savings. Here are a couple illustrations of how you can salvage large money, using the same basic idea:

If you get paid every two weeks, watershed your monthly principal and interest payment in one-half and then direct your lender a check for that amount during those calendar months in which you have three paychecks. Just sending in those two extra checks will be the equivalent of one extra payment a year.

If you don't desire to direct lump checks, you can get the same consequences by dividing your monthly principal and interest payment by twelve and then adding that extra amount to your payment every month. Normally, that figure won't set too much extra strain on your budget, and it will add an extra mortgage payment to your loan every year.

You really can salvage important amounts of money and shorten the life of your loan by making extra payments, but you definitely don't have got to pay a lender $400-500 to make it. Making those extra payments is easy to make yourself, and at no extra charge--which is always a good thing.

Copyright © 2005 Jeanette J. Fisher All rights reserved.