Biweekly Mortgage Vs. Monthly Mortgage
A mortgage is a loan taken out to pay for the purchase or construction of a home. Most mortgages require monthly payments to be made, but some lenders offer a biweekly payment option.
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Function
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When you make biweekly payments rather than monthly payments on your mortgage, you pay the equivalent of 13 months mortgage payments in one year. Because of that, you pay down the balance sooner, which decreases the amount of interest you pay on the account.
Considerations
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Some lenders will impose an extra fee on biweekly mortgages for the extra processing of two checks each month.
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Warning
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If you make biweekly payments on your mortgage without an official biweekly plan, make sure that the lender applies the payment to your mortgage when it is received rather than waiting until the next monthly payment is due.
Size
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If you took out a $200,000 mortgage at 7 percent over 30 years, you would save more than $70,000 by making biweekly payments instead of monthly payments.
Alternatives
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Making one extra monthly payment each year or adding 1/12 of a monthly payment to your payment can have virtually the same effect as paying biweekly.
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