Reducing a Mortgage With Bimonthly Payments
Reduce the number of years you pay your mortgage by setting up "bimonthly" payments with your bank. These payments are usually set up to come right out of your checking account every other week--so really they are biweekly (that is, once every two weeks), not bimonthly. If you pay once every two weeks you will wind up making one whole extra payment per year. By making biweekly payments you can save yourself thousands of dollars in interest and knock seven to 10 years off your mortgage agreement. If you elect instead to make bimonthly payments, you will save about $300 over the course of 30 years and maybe pay the mortgage off a month or so ahead of time. Many different banks offer this service to their customers and all you have to do to take advantage of it is sign up.
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Instructions
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Gather all your mortgage and banking information. Make sure you have account numbers for both your mortgage and your checking account as well as the routing number for your bank.
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Look over your mortgage statement and look for information regarding bimonthly or biweekly mortgage payments. See if there's a phone number for you to call.
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Call your mortgage holder and discuss the possibility of setting up biweekly or bimonthly payments.
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Give the mortgage holder any necessary information, such as your bank’s routing number and your personal checking-account number.
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Choose the two dates per month that you want the mortgage holder to debit the funds from your account; usually the dates for the debit are the first, the 15th or the 30th (or last day) of the month. Pick other dates if these do not suit your paycheck timetable.
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Make sure the proper amount of funds is in your checking account at least a day or two before the payment is set up to be withdrawn so there is no overlap causing your account to be overdrawn. Keep in mind that you need to make two half payments every month now instead of just one whole payment. Adjust your other bills if necessary.
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Tips & Warnings
Find a mortgage calculator online and discover how much money you could save with biweekly payments. For example, if you have a $100,000 loan for 30 years at 7 percent interest, you could save over $34,000 over the life of the loan.
If your mortgage company does not offer this type of program, there are third-party lenders with whom you can work in the same manner to reduce your mortgage.
