Bi Weekly Mortgage Loan Programs
What is it about the bi weekly mortgage plan that is so appealing that homeowners would pay someone to set it up? Some companies charge as much as $400 plus perhaps even a monthly maintenance fee for as long as you are enrolled in the program? Well, what makes a bi-weekly mortgage program so attractive is that you can save 10’s of 1,000’s of dollars in interest and pay your home off 5-7 years earlier if you really do the plan. Even better is that you can do this program yourself without paying anyone to set it up for you. Follow along and you see what it takes to set this up on your own for no extra fees.
Bi Weekly Mortgage Loan Basics
Let us start with the basics of the plan to see what is really going on. Once you see this and understand it, you will be able to do it yourself and be on your way to saving money and paying your home off earlier. If you think about it, bi-weekly means a payment is made every two weeks. If you take the number of weeks in a month as 52 and you divide this by 2 (for every two weeks) you are going to be making 26 payments in a year. Now, if you budget for the same amount of money be taken from your paycheck every two weeks for your mortgage payment, by making 26 payments you will be making one extra payment a year. Said in another way, instead of making 12 monthly mortgage payments, you would be making 13 monthly payments. By making this extra payment a year, you will reduce your payback period and you will be saving a lot of money.
If you think about what I just wrote, 13 monthly payments, you might start to see ways that you could get the money for the extra mortgage payment instead of making bi-weekly payments. Here are a couple of suggestions for the extra payment a year: If you get paid every two weeks there are two months a year that you will get an extra paycheck for that month. For those extra two paychecks subtract ½ of your mortgage payment each check and then send those checks in when you get them so that they go towards your mortgage, versus extra nice dinners. Make sure when you send your checks in for these extra payments that you indicate that the payment is for a principle payment. If you do not specify this then you run the risk of the mortgage company applying this payment to your interest and you are essentially throwing your money away.
If you get paid twice a month you can see that you’ll only make 24 monthly payments. To make the bi weekly concept work in this case, divide your monthly payment by 24 and add this much to each of your paychecks. This will make up the extra payments so you’ll be able to reap the benefits of the bi-weekly payment without much strain on your budget.
Start Saving Thousands of Dollars On Mortgage Interest.
Start this program today. Check with your mortgage lender, the folks who get your monthly payment. See if they will accept bi-weekly payments. You may ask them whether or not you have to indicate the extra payment or does that automatically get contributed to your principle balance. Depending on their answer, you will know what to do. Whatever you do, save your cash, do not pay anyone to set this up for you, you work too hard to have your money be taken so easily.
Use a bi weekly payment plan calculator in GetPreQualified.com’s mortgage calculator section.
Article by GetPreQualified.com editorial staff. This Article is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.
Bi Weekly Mortgage Loan Programs Explained