What Are Biweekly Mortgage Payments?
Biweekly mortgage payments are a way to schedule your payments to happen every two weeks alternatively of once a month. Doing some quick mathematics here, that means you ’ ra sign on for 26 half-size payments a year, which is like 13 life-size payments .
Do you realize what this means ? If you go the biweekly road, you ’ ll be sending an extra monthly payment every year without barely feeling it ! If you make a habit of that on a 30-year loanword, you can cut four freakin ’ years off a mortgage, depending on the matter to rate !
Should You Make Biweekly Mortgage Payments?
well that depends on how fast you want to pay off your mortgage ! We assume you ’ re down with being wholly debt-free as fast as possible. In that case, you ’ re on the lookout for every extra advantage you can find to make that happen.
Use the mortgage wages calculator and see how flying you can pay off your home !
Biweekly payments work in truth well for some people—especially people who get paid on that rhythm method of birth control. After all, how commodious would it be to have the lapp act of annual payments as paychecks ?
Those who like them appreciate the means you can about sneak in that extra annual requital without much pain. Think about it this way. Which is easier—scheduling 26 payments of X sum paid biweekly throughout the year ? Or paying bivalent that amount the inaugural 11 months of the year, and four times that come in December ? Using the exemplar of $ 1,600 a month—which is what the U.S. Census Bureau reports as the medial mortgage payment—let ’ s chart the differences. 1
|Biweekly||monthly||Monthly + an extra payment at year ’ s end|
|sum issue of annual payments||26||12||13|
|full come paid on mortgage all year||$ 20,800||$ 19,200||$ 20,800|
|payment total||$ 800||$ 1,600||$ 1,600|
|How it feels||easy||normal||Hard ( you have to cough up a double payment in a single calendar month )|
The fortnightly organization makes a lot of smell ! It gives you the lapp overall rush boost you ’ d draw from doubling up your end-of-the-year payment, without the pain of actually forking over double the cash at one clock. You ’ re basically spreading that extra payment across the year and getting into the substance abuse of sending above the minimal requital every two weeks .
Things to Watch Out for Before Starting Biweekly Payments
Who doesn ’ thymine love the idea of becoming completely debt-free six, seven or eight years oklahoman than scheduled ? The quicker you pay your house off, the more income you ’ ll have available to put toward long-run wealth building !
But there are besides a few things to keep in beware before you set this up with your lender .
Don’t Let Biweekly Payments Slow Down Your Debt-Free Progress
semiweekly payments are no substitute for gazelle saturation. a soon as you hit baby Step 5, it ’ s time for you to start sending arsenic a lot as you can toward getting rid of that mortgage constantly ! If fortnightly payments help you make that happen faster, so be it ! Just don ’ metric ton jumble “ set-it-and-forget-it ” with focused intensity. Forcing yourself to send one extra monthly payment a year is one step you can take in the right direction—but it ’ s not an apologize to keep the mortgage around any longer than you have to .
Make Sure Your Mortgage Company Accepts Biweekly Payments Without Fees
You need to confirm that your lender actually accepts semiweekly payments—some don ’ thyroxine. And evening if they do, they may charge fees for the option. Never go for that ! It defeats the hale purpose of semiweekly payments, which is to save yourself money in the farseeing run .
If your lender can ’ metric ton ( or won ’ thymine ) allow you to set up normal semiweekly payments without fees, just open a discriminate bank report dedicated to making your mortgage requital. You can deposit your half-payment sum there every two weeks and use that money to make your full monthly mortgage payment ( could be automatic or by check ). now remember : You ’ ll make your mortgage payment every early clock time you make a situate. So you ’ ll end up with your planned 13 payments by the end of the year, while even following your mortgage company ’ randomness rules about the time of the payments. Win-win !
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How to Set Up a Biweekly Mortgage Payment
If fortnightly payments sound like a good mind for your position, and you ’ re absolutely certain they ’ ll help inspire you to speed up paying off your house, let ’ s walk through the easiest way to set this up .
- Grab your monthly mortgage statement and take a look at the principal and interest portion of the payment. To find your new biweekly payment, we’re going to divide the monthly number by two. For example, if it’s $1,600 like the example above, you’ll be sending in biweekly payments of $800.
- Don’t forget to include the tax and insurance portion of your payment each month. The $800 example only covers principal and interest.
- Remember what we said about confirming that your mortgage company actually receives biweekly payments. First make sure that they do, and then double-check that there are no fees involved. Yes, it’s simpler for you if they receive biweekly payments. But even if they don’t, you can still use a separate bank account where you send biweekly payments.
- Remember, the key here is using any method available to get out of debt in a hurry. If the biweekly system lights a fire under you, embrace it! On the other hand, keep your eyes open for every extra dollar you can send to destroy your debt completely.
Get a Home Mortgage That Fits Your Budget
One of the biggest mistakes people make when choosing a mortgage is to focus on finding the lowest monthly requital. But the real key to building wealth long term is to focus on the total cost. here ’ s a clue : We suggest a 15-year fixed-rate conventional lend. And hera ’ s another handy guide—you ’ ll know you can afford a mortgage if the monthly payments are no more than 25 % of your monthly take-home pay .
If you ’ re looking to pay off your mortgage faster, consider refinancing. The right deal could save you a long ton of interest and help you pay it off way sooner .