Having a mortgage can be expensive. Since interest is added to your payments over the life of the loan, a big chunk of what you end up paying is just interest and not the loan itself. Obviously, it's important to be able to pay off your mortgage as quickly as possible to keep your interest costs low. It's also important to make sure that all of your payments are made on time to avoid late fees or other costs. A bi-weekly mortgage is one option that can help you pay off your mortgage faster while also letting you pay less at any given time.
If you haven't heard of it before, a bi-weekly mortgage is a way to pay your mortgage that lets you pay a small amount every two weeks. It's not a real mortgage loan, but rather a service that will help you pay off your mortgage faster than if you just made your regular payments every month. There are both pros and cons to bi-weekly mortgage services, and you should think about some of them to make sure that a bi-weekly mortgage plan meets your financial needs.
How Mortgages Work Every Two Weeksbr>
When you use the standard plan for paying your mortgage, you make one payment every month, for a total of 12 payments per year. With a bi-weekly mortgage plan, on the other hand, you pay half of your current payment every two weeks. This means that over the course of a year, you make 26 half-payments. A bi-weekly mortgage basically lets you make one extra full payment every year. This cuts a full month off of your schedule of payments every year that you use this plan. Even though you have to pay a service fee to the company that helps you with your bi-weekly mortgage, you still save money in the long run because of the interest savings.
Advantages of a mortgage that is paid every two weeks
The biggest benefit of a bi-weekly mortgage plan is that you can pay off your mortgage early and save a lot of money on interest. Most homeowners will save a lot of money because they will be able to pay off their mortgages two or three years sooner. Since the payments are smaller than they would be if you paid the full amount once a month, it can be much easier to fit them into your budget. Many companies that let you make payments every two weeks will let you change the dates of your payments so that they work best with your income. This lets you pay when you get paid.
There are some problems with a bi-weekly mortgage.
Even though twice-a-month mortgage payments may sound great, they also come with some problems. Even though you pay your bills to the service provider, you are still responsible for your mortgage. This is probably the most important thing to remember. The service provider is not a lender and has no control over your mortgage. They only pay your mortgage once a month, just like you would. If there's a problem with the payment, you may have to pay it yourself while the problem is being fixed, or you could get charged late fees or have your interest rate go up because you paid late.
Another big problem with bi-weekly mortgages is that the services these companies provide aren't anything you couldn't do yourself with good budgeting. In the end, if you have the self-control to set up your budget like you're making payments every two weeks, you could save a lot more by doing it yourself than by using one of these services. You will save more money because the service will charge you a transaction fee every time they process one of your payments (in some cases you may have a fee for each time that they receive a payment from you via direct deposit, for each time that they make a payment, and an additional fee for account maintenance.) Depending on how you manage your money, you might be able to pay off your mortgage even faster than you would with a payment service if you set aside a little more than half of your monthly payment every two weeks. This is true only if you have a plan for your money, though.
