One thing your lender may not have told you about when you were getting your mortgage is that you don’t have to stick to your mortgage payment schedule you were given. Although you’ll face penalty charges if you don’t make at least the required payment by the due date, you can also pay your mortgage more frequently. Lenders often neglect to tell you this information because it can help you save money on mortgage payments.
What Are Bi Weekly Payments?
Just looking at what the payments are called should give you a bit of a clue to what they are. A bi weekly payment is a payment you make every two weeks. It’s different from a monthly payment, which you make on the same day of the month, every month. Because you make a bi weekly payment more frequently, its amount is only half of your regular monthly payment.
If you’re making bi weekly payments
, you’re changing your mortgage payment schedule in one key way. You make half a payment every two weeks, which is the same as a full payment every four weeks. However, because most months have slightly more than four weeks, this adds up to an extra full payment every year. Just do the math: there are 52 weeks in a year, and when you divide that by a half payment every two weeks, that’s 26 half payments, which are equivalent to 13 full payments.
Why Are Bi Weekly Payments Helpful?
The main answer is that they help you save money on mortgage costs. You’re making an extra half a payment twice each year, so you’re reducing the amount you owe on your mortgage. This also cuts your interest costs for each future payment. Many people will pay off their mortgage five or more years early on a bi weekly mortgage payment schedule.
The other main benefit of bi weekly payments is that they’re more likely to match up with your payday schedule. If you get paid every two weeks, you’re probably used to having to save money from one paycheck so you’ll have enough to cover your whole mortgage payment after the next paycheck rolls around. With a bi weekly mortgage payment schedule, you get to pay half a payment out of each of your bi weekly paychecks, which evens out your cash flow.
Next time someone asks you, “Hey, so what are bi weekly payments?” you’ll be equipped with the answer for them. Don’t forget about our referral program here at Half a Payment. We’ll give you $50 for every person you refer who enrolls in Half a Payment!
April 17, 2013