Question: What is your favorite part of making your monthly mortgage payment?
What, you don’t enjoy paying thousands of dollars in interest over the life of your loan?
Well, did you know that you can save thousands just by paying your mortgage bi-weekly instead of monthly? Read on to find out how.
Typically, when we take out a mortgage loan, we dutifully make our payment once a month, or 12 times a year. Making bi-weekly payments, however, means you would take your monthly payment amount, split it in half, and make that halfsie payment every two weeks. What does this break down to? Well, there are 52 weeks in a year, split that in half, and this means you will make 26 biweekly payments — which adds up to 13 full payments per year, or an extra mortgage payment a year.
So, big picture example: Let’s say you have a 30-year fixed rate mortgage valued at $500k. For simplicity’s sake, let’s say we’re not putting anything down. We know rates are lower at the moment, but again, for simplicity, let’s say a 4% interest rate. If you make bi-weekly payments as opposed to traditional monthly payments, you would save $58,447 over the life of the loan AND pay it off more than 4 years early!
Before you jump into bi-weekly payments, chat with your personal loan consultant 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, please give us a call. We’re here to help, so don’t hesitate.