Did you know that you could save a considerable amount of money with biweekly mortgage payments?
Over the lifetime of your loan, you pay an enormous amount in interest fees. In fact, the typical mortgage ends up costing about twice the amount of the original loan when it is paid off, even if you have a reasonable interest rate. Knowing this really puts things in perspective.
However, when you make biweekly payments on your mortgage, you can save money and pay the mortgage off faster than if you were simply paying a monthly bill.
Here’s how it works:
- You take your monthly payment and divide it by two.
- Instead of sending a check monthly, you send a check every two weeks.
- Because of the way that the dates fall, instead of making 24 payments in a year, as you might assume, you end up making 26 payments. That’s a full extra mortgage payment every year.
- As you do this, you significantly reduce the amount of interest you pay over the life of your loan. Furthermore, you’ll be able to pay off your mortgage years ahead of schedule.
Before you start on this plan, check with your bank to make sure that there are no penalties for making biweekly mortgage payments. Some loans have an early repayment fee, which means that if may not be worth your time. If your bank does charge an early repayment fee, check to see what it is, and crunch the numbers of how much you’ll be able to save. You still may be able to save more money by m