How to Make Bimonthly Mortgage Payments

Have you received an offer to make bimonthly mortgage payments? Read the fine print, as this may not be a favorable mortgage arrangement. And, the lender can charge money that will not count towards reducing your mortgage principal. If you sign a contract to make bimonthly mortgage payments, you will be locked into paying on your mortgage every two weeks. This applies whether you have the money or not, even if your financial situation changes. Here are some ways to make bimonthly mortgage payments and avoid financial headaches and fees.

Difficulty:

Moderate

Instructions

Things You'll Need

• Mortgage
• Money
• Home
• Extra principal

1. Get a good picture of your financial situation both now and perhaps five years down the road. Ask yourself if you can afford to make extra mortgage payments, especially bimonthly.

2. Since your financial situation may change, and you will not want to pay additional service charges, consider adding on your own extra mortgage payments. But do not just send extra money to the mortgage company without designation and your regular amount. Any extra amount is referred to as additional principal on your mortgage. Routinely, there is a form on your payment coupon or with online payments designated for extra principal.

3. Determine the amount of extra mortgage principal you can make. This is done by dividing your monthly mortgage payment by 12, and that would be the extra you would pay. For example, a $1,000 per month payment would mean an extra $84 principal payment (approximately). If you escrow for taxes, it may take a bit more depending upon the amount.

4. If you make payments electronically through your bank's bill pay website, many times the bank will assume you want any extra payments applied to the principal. Call or email the mortgage lender or bank to make sure your (bimonthly) mortgage payments are being applied correctly, or go online to your mortgage Web site or view your statement.

5. When you make bimonthly mortgage payments in this manner, you will have more peace of mind. There are no mortgage fees, fines, deadlines or contracts. Most times this will equal a bimonthly payment. Check the amortization table links for more information (see Resources section).

Tips & Warnings

• Ensure all other debts are paid off before you attempt bimonthly type mortgage payments and you have a substantial savings account.

• If you cannot do 1/12 of a payment, start with $5, $10 extra until you work up to it. Every little bit conquers the mounting interest on your home so you own it sooner!

• Be sure your mortgage does not have a prepayment penalty built in.

• Check with a financial or tax advisor to find out what impact this will have on your individual situation. This is not meant to replace the advice of professionals.

Resources

• Amortization Table
• Bankrate.com amortization and financial tools