Biweekly Mortgage Payment Pays Off The Loan Quickly

2007-03-08 10:33:40

( Financial )



If you have been thinking about a long-term fixed rate mortgage but want to fast-track payment, you may consider biweekly mortgage payment. A biweekly mortgage payment makes you pay your mortgage loan every two weeks (instead of once a month).

Since there are fifty two weeks in a year, that adds up to thirteen payments annually. The thirteenth payment goes entirely to principal, which helps pay off your mortgage more quickly. If you calculate mortgage payments by paying biweekly, the payback time of your long-term loan can be shortened by at least twenty-five percent.

But biweekly mortgage payment does not apply to everyone. It works best when you are employed and paid on a weekly or biweekly basis. You can easily budget your money to take care of your biweekly mortgage payment.

However, if you’re paid monthly or work for yourself and receive income randomly, the biweekly mortgage payment cannot be applicable in your situation. You would rather make payments once each month.

Generally, a biweekly mortgage payment is arranged between you and the lender at the time you secure financing. Both you and the lender agree that payments should be made every two weeks. If you already have an existing mortgage and want to convert to biweekly mortgage payment, talk to your lender on how to change your payment schedule.

For mortgage payment protection, the lender will require that your biweekly mortgage payment be deducted directly from your checking account. And if you will have insufficient funds in the account, the loan will revert to a normally amortizing mortgage.

Be aware that some third parties offer to convert your existing mortgage payment schedule to a biweekly mortgage payment and forward your payments to the lender. You may find this convenient but this may not be a good deal because these parties will charge a fee for the service.


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