Grace asks… I’ve heard that bi-weekly mortgage payments can save me a great deal of money… Is this true?

Grace what you have heard is in fact true! Bi-weekly mortgage payments serve as an accelerated mortgage payoff system which allows you to make one extra monthly payment per year. Here’s how it works; Instead of making 12 mortgage payments a year, you make a payment once every two weeks. This equates to 26 half mortgage payments which comes out to be 13 total monthly mortgage payments per year.

There are some great benefits for you – You can increase the amount of equity in your home, you save thousands of dollars in interest and since payments are made frequently this decreases your loan balance quickly.

Now unfortunately you cannot just simply mail in a half-payment twice a month to your lender. Banks will require you to set up a bi-weekly payment system through an accelerated mortgage payment program, which in some cases can get pricy. So make sure you ask the right questions to your lender and calculate the cost ( it could be about $100 per year)  To avoid loan fees, you can make one payment ahead and then can do the twice a month payments on your own or another  quick and easy solution to this problem; Take your monthly payment and divide it by 12, then add that number to your payment you send in each month. ie… so if your principle and interest payment is $ 1000 per month – pay $1083.00 per month for twelve months which will equate to one extra payment!

By increasing your monthly mortgage payment like this, you will create the same result without paying fees to a mortgage payment program. The key to this method is all in self-discipline. You have to make sure that you in fact are paying more towards your mortgage balance each month, or it will not work.

With all of this in mind, anyway you cut it, bi-weekly mortgage payments are in fact an easy way to save money as long as you do it right!

Meet Cheryl!

About Cheryl

As a successful business owner and community leader, Cheryl Braunschweiger is known and respected for getting things done with a degree of skill and enthusiasm that bring out the best in those around her - colleagues, clients and friends. The name of her business, ALMC Mortgage, reflects Cheryl's philosophy and personality. She says it stands for All Loans Must Close –a reflection of her determination to do whatever it takes to serve her clients. Cheryl has been in the mortgage lending business for 20 years. Read More About Cheryl
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