Bi-weekly Mortgage Calculator

savings calculatorThere is often confusion with bi-weekly mortgage plans. Many people hear about them for the first time and assume that all they have to do is pay their mortgage 2 times a month and they will get these incredible savings. The key, however, is in the subtle difference between paying twice a month and paying every two weeks. Confused? Here is a more detailed explanation:

If you make payments twice a month, you would make a total of 24 payments (12 months x 2 payments a month = 24 payments). If you pay every two weeks, however, you’ll make 26 payments (52 weeks divided by 2 = 26 payments) during the year. The huge savings that bi-weekly mortgages provide comes not from paying twice a month, but by making the equivalent of an extra monthly payment each year toward your mortgage.

The beautiful thing about bi-weekly mortgage payments is that you can usually do them yourself with no penalty. Contact your mortgage lender to make sure. Also, be sure that you have other debt paid off first since it usually makes little sense to pay off your mortgage early if you have credit card debt. Want to know how much you can save? We have a new visual bi-weekly mortgage calculator so you can see. Play around with it and I think you’ll be surprised.

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4 Responses to Bi-weekly Mortgage Calculator

  1. I’ve heard about the biweekly plan. In my experience, it works well for very structured people. Other alternatives are to round up when you pay your mortgage, or to have extra money added to your automatic payments. Even a little bit each month can make a significant difference.

  2. Duane says:

    Be wary of paying a transaction fee to the mortgage lender for a 24 month payment cycle. This is common as the perceived (justly or not) value of paying twice a month has taken hold. Angie’s suggestion about rounding up is probably a better way to go.

  3. Dillie says:

    Note that most mortgage loans only permit one payment per month. That being the case, if you make arrangements with the lender for biweekly, they are using your money the entire year and then at the end of the year they make the 13th payment. And for this they often charge a set up fee of as much as $500 and sometimes a monthly transaction fee. All for something you can do yourself. Just divide your mortgage payment by 12 and add the additional amount (or more if you can) to each monthly payment ($1200 mortgage/12 = $100 add’l per month and that equals the 13th payment by the end of the year). Be sure to tell you mortgage lender that any excess payments should be applied to the principal of the loan. Also, a true biweekly plan is paying and applying half your mortgage payment every two weeks. This will reduce the payment period significantly (a 30-year loan is reduced to a 24-year loan, saving you 80 payments (6 yrs x 12 payments per year). However, trying to find a lender that has a true biweekly mortgage loan program that actually applies the payment every two weeks is hard to find, but well worth it if you spend the time looking for one.

  4. Dillie says:

    Oops sorry, that’s 72 pmts

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