What if we told you that you could save nearly $20,000 in interest over the life of your loan just by changing the timing of your mortgage payments? It’s true! By paying your mortgage bi-weekly instead of monthly, you could not only save thousands, but you could pay your mortgage off quicker.
Let’s jump right in with an example. Let’s say you purchased a home for $350,000 and put down 20%. So, you take out a mortgage for $280,000 and you got a rate of 3%. Your monthly principal and interest payment is $1,180.49. Normally, you would just make that payment once a month, right? But what if you want to pay your mortgage off quicker without it feeling like a financial burden?
If you make bi-weekly payments as opposed to traditional monthly payments, you would take that $1,180 payment – and for simplicity’s sake, let’s round to the nearest dollar – split it in half, and pay $590 every two weeks. Doing this, you could save $19,990 over the life of the loan, plus you’re paying that mortgage off 17 months early That’s 17 months worth of payments that you just don’t have to pay.
This is because there are 52 weeks in a year, split that in half, and you will make 26 biweekly payments — which adds up to 13 full payments per year rather than the typical 12. So, you end up paying an extra mortgage payment a year.
Now, before you jump into bi-weekly payments, chat with your Loan Officer to make sure there are no prepayment penalties on your loan and that the extra payments will be applied entirely to your loan’s principal rather than to principal plus interest.
Going this route is definitely worth your while. Well, that is, if you enjoy saving tons of cash. If you have questions, give your Homespire Loan Officer a call. We’re so happy to help you reach financial freedom with a paid-off mortgage.
Visit https://www.homespiremortgage.com/loan-officer-search/ to find a Homespire Loan Officer near you.