This BLOG On Bi-Weekly Mortgage Loan Payments Versus Monthly Payments Was PUBLISHED On November 29th, 2018
Once home buyers close on their home loans, they need to make their monthly mortgage payments.
- Lenders require mortgage payments due on the first of the month
- However, lenders will give homeowners a 15 day grace period to make their monthly mortgage payments
- The great news is if homeowners can make Bi-Weekly Versus Monthly Payments, it can shave years off the term of their home loan
We will discuss on how this can be and possible on this blog.
How Does Bi-Weekly Mortgage Loan Payments Versus Monthly Payments Work
Bi-Weekly Mortgage Payments and how do they work.
- How does a bi-weekly Mortgage really work?
- How much more do I have to pay?
- How much can I really save?
How it works.
Bi-weekly loan payments can work with any loan program. Borrowers can make Bi-Weekly Mortgage Loan Payments with regular mortgages:
- FHA, VA, USDA, Conventional, Jumbo, Non-QM Loans can all be made with Bi-Weekly Mortgage Loan Payments
But instead of making one payment a month you make two half-payments a month.
There are 52 weeks in any calendar year. By making 26 payments, borrowers are making one extra payment a year.
Does Bi-Weekly Mortgage Loan Payments Really Work?
Does it really work?
Yes, it shaves off a great amount of interest.
- In Fact, homeowners can save 4 years of payment by making bi-weekly payments from the term of a 30-year mortgage
- The reason is the one extra payment a year goes directly to the principal of the home loan and not interest
The bi-weekly mortgage loan payments are most effective when the loan servicer does not charge extra fees for processing the payments.
Make sure as homeowners, borrowers understand their options when making bi-weekly mortgage loan payments.
Other Options Of Saving Money For Homeowners
One other option to look at.
Add ½% to your monthly payment.
- Add $100 to a $1,200 payment
You don’t have to make the extra money payment for the month if things are tight and worry if the servicer charges fees.
Cautions Involving Biweekly Mortgage Payments
- While there are numerous ways that you may be able to make biweekly payments
- It’s important to be aware of the cautions
Make certain that your servicer allows biweekly payments and applies one of them each month to the principal balance.
- Don’t start making biweekly payments on your own before checking with your lender to make sure you don’t get penalties and that they will apply for the payments correctly
Other Ways to Pay Down Your Mortgage Faster
If making biweekly payments isn’t an option for you., there are a couple of ways you can still pay down your mortgage.
- Set the money aside monthly in a savings account and make one extra mortgage payment each year
- Pay the extra amount to the mortgage company each month separately from your mortgage payment as the additional payment to principal
- Be sure to check out all conditions and cautions before changing the way you pay your mortgage
Consider refinancing and paying off all your debt and monthly household expenses. Then make an extra payment and pay down the principal and apply this method to reduce your mortgage.
November 29, 2018 - 3 min read