How to Calculate Biweekly Mortgage Payments
Calculating biweekly mortgage payments can give you the ability to clearly analyze what type of savings can be assumed by making a payment on your mortgage every other week. Not to be confused with a bimonthly mortgage payment, a biweekly mortgage requires you to make a partial payment every other week. In most cases, this means you will make 26 biweekly mortgage payments each year instead of 12 monthly payments.
On average, over the course of a 30 year loan, a homeowner could easily knock off over 5 years on their house just by making biweekly mortgage payments. Overtime, this can add up to thousands and thousands of dollars in savings! Every homeowner should do themselves a favor and at least consider calculating the savings that could be had from making biweekly mortgage payments.
If you are interested in reviewing your possible savings, check out the following steps on how to calculate biweekly mortgage payments.
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Instructions
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Write down important data concerning your loan as the first step in calculating biweekly mortgage payments. You need to know when you plan to make your first biweekly payment, the terms of the mortgage, the interest rate, and loan amount. These are important pieces of information, regardless of the type of mortgage calculation you are running. If you currently own your home, then you should already have easy access to this information.
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Find an online biweekly mortgage payment calculator that is easy to work with. There are plenty of free mortgage payment calculators available today that can be leveraged to find out the possible savings of a loan. If you enjoy running your own calculations and want to learn a little more about mortgages, you could always figure out your savings by hand or by using a spreadsheet software. There are plenty of tools that you can use to find out your savings, so pick the one that is best for you.
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Plug in your mortgage data from step #1 into your biweekly mortgage payment calculator and begin reviewing the results. If you are interested in paying off your mortgage early, then consider making additional payments on the principal. Most good calculators will allow you to add another variable to the equation so that you can see even better results at paying off your mortgage early. You should try and run several different scenarios through this step by changing loan amounts, interest rates, and extra payments.
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Compare your biweekly mortgage payment calculated results with your personal budget to ensure you can afford to pay on your home every other week. Be sure to factor in any escrow or tax payments required by the state, city, and/or township that you live in as well as home owner's association dues. It is important to take into account all monthly fees that are associated to owning a home. This is critical in your decision making process and should not be taken lightly.
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Use your review and analysis of making biweekly mortgage payments and take the next step if you are comfortable with the results. It is easy to simply run the numbers and sit back and dream of saving $50,000, $75,000, or even $100,000 on the total cost of owning your home. The problem is that you have only taken a few steps and haven't followed through completely. Do yourself a favor and get on the phone with your mortgage lender and take advantage of these types of programs!
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Tips & Warnings
If you are not interested in making biweekly mortgage payments, at least consider making additional monthly payments on your mortgage. The more you can use to pay down the principal on a home, the sooner you can own your home!
A biweekly mortgage requires that you make 26 payments that are equivalent to 13 monthly payments. Make absolute sure you can afford making this extra payment before applying for any type of biweekly mortgage plan.
Don't confuse a biweekly mortgage with a bimonthly mortgage. There will be 2 months per year that you are required to make 3 mortgage payments instead of 2 like a bimonthly mortgage.
