![]() Please do not enter commas, dollar signs, or any other non-numeric characters, as this will cause an error. ![]() Please Note: When entering information into the data fields, only use numbers and applicable decimal points. Have questions? Use our quick quote to get a fast quote. Did you know that you can pay off your mortgage early By making biweekly payments you essentially pay one extra payment toward principal each year which. It offers you a very viable alternative for financial planning purposes. So, if you have a 6% rate of interest, your bi-weekly payment plan can reduce the effective interest rate to 4.875%.īefore considering refinancing for the sake of an interest rate reduction, be sure to take a look at the benefits of a bi-weekly payment plan. As a result, you could easily take a 7.5% rate, and the effective interest you would pay could be equal to 6.15%, all without ever refinancing. The result is that the amount of interest you pay is reduced accordingly. The accelerated bi-weekly payment is calculated. The effect can save you thousands in interest and take years off of your mortgage. This additional amount accelerates your loan payoff by going directly against your loans principal. If you have a 30 year mortgage and your rate of interest is 7.5% annually, using a bi-weekly payment plan reduces the principal balance of your loan much faster. Since you pay 52 weekly payments, by the end of a year you have paid the equivalent of one extra monthly payment. Even if you can't comfortably manage biweekly payments, there are still ways you can reduce the life of your loan and lower the amount of interest you owe.The typical bi-weekly mortgage plan can not only shorten the terms of your mortgage loan, it can also dramatically reduce the effective interest rate you pay. While biweekly payments aren't the best option for everyone, they can certainly benefit those with a steady income and who plan to stay in their homes for a while. By the end of the year, you'll have a full extra payment to go towards your principal, thus shortening you loan's life and lowering interest. To do this, simply divide your monthly payment by 12 and add that amount to your payment. You can continue to make one monthly payment with a portion of that "extra" thirteenth payment included in each installment. If biweekly payments aren't ideal for you, there is another way to save money. The positive effects of a biweekly payment schedule won't be evident for some time, so you would be paying extra money every year for no reason if you decided to move. ![]() Thus, the biweekly payment plan is typically more suited to those who get a paid twice monthly.Īlso, this is a long-term plan for those who intend to stay put for at least 10 years. If you only receive a paycheck once a month or if you're self-employed and can't rely on a set income, you may find that having a payment automatically deducted from your account every two weeks without the option to put it off until the end of the month beneficial. Should you decide to enroll in a biweekly payment program with your lender, you'll more than likely be entering into a contract that forces you to adhere to making twice-monthly payments no matter what.įor some, this lack of flexibility isn't ideal. While the end result of using this payment method is certainly attractive, it's not without its risks. ![]() Amortization extra payment example: Paying an extra 200 a month on a 464,000 fixed-rate loan with a 30-year term at an interest rate of 6.500 and a down payment of 25 could save you 115,843 in. As a result, you'll save money on interest. Use this amortization calculator to help you determine how many months it could take to pay off your loan with or without making extra payments. In today's economy, you could expect to finish paying off your loan four years sooner by making biweekly payments. Instead of going towards interest, that "extra" payment gets applied to your loan's principal amount, meaning you'll end up reaching your loan's payoff date sooner. How Does It Work?įirst, let's take a look at how biweekly payments work.īecause there are 52 weeks in a year, sending in a payment every two weeks equals out to 26 half-payments each year, or 13 full ones. Before you take your lender up on the offer to start making biweekly payments, it's important to understand how this program works and if it's right for you. It sounds too good to be true, and it almost is. Instead of sending in one payment each month, you send in half of your monthly payment every two weeks, effectively shaving off years from your loan. If you've recently taken out a loan or started using a credit card, chances are you've received some kind of offer from your lender to enroll in a biweekly payment program. How Biweekly Payments Can Save Borrowers Money
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