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Paying Biweekly Payments vs. Monthly Mortgage Payments

mortgage paymentsAs you make your monthly mortgage payments, you might be wondering if there are ways to pay off your loan faster under your existing loan terms.

For example, you may have considered making biweekly payments rather than monthly payments.

Let’s take a look and see if this is an option and how it might work.


Biweekly Mortgage Payments Explained

A biweekly payment means that you send in half of your monthly mortgage payment every 2 weeks instead of the full payment once a month. In theory, this would reduce the loan balance quicker, meaning that you could pay off your loan in a shorter amount of time and reduce the amount of interest you pay on the loan in the end.

It’s standard to pay monthly mortgage payments, so you might wonder if biweekly is really an option. Here are some possible biweekly mortgage payment options:

  • Your lender may offer a biweekly payment option*
  • A 3rd party may offer a biweekly payment option on your behalf for a fee*
  • You might handle paying biweekly payments yourself*

*There are cautions with all of these options, so be sure to read the full article!

What are the Benefits of a Biweekly Mortgage Payment?

When you make biweekly payments instead of monthly payments, as long as they are processed when received, you will pay down your principal faster. Here are a couple of benefits to consider regarding biweekly payments:

  • Paying a half payment every 2 weeks results in 13 full payments in a year rather than 12, reducing the principal balance on the loan, which means you’ll not only pay less interest, but pay off the loan sooner.
  • Paying a half payment every 2 weeks rather than the full amount each month may be easier to budget for depending on when and how often you receive your paycheck.


Cautions Involving Biweekly Mortgage Payments

While there are multiple ways that you may be able to make biweekly mortgage payments, it’s important to be aware of the cautions.

  • Make certain that your lender allows biweekly payments and applies one of them each month to the principal balance, rather than just holding the payment until the other half arrives and then processing it all as one full payment.
  • Check out 3rd parties very carefully - they usually charge fees and sometimes just hold the payments and send only the full payment to your lender. They also may not be as careful to make sure your loan payments are reaching the lender on time to avoid late fees.
  • Don’t start making biweekly payments on your own before checking with your lender to make sure you don’t get any penalties and that they will handle the payments correctly.

Other Ways to Pay Down Your Mortgage Faster

If making biweekly mortgage payments isn’t really an option for you, there are a couple of ways you can still pay down your mortgage faster.

Calculate the amount of one extra mortgage payment and divide by 12. Then try one of the following options:

  • Set the extra amount aside monthly in a savings account and make one extra mortgage payment each year.
  • Pay the extra amount to the mortgage company each month separately from your mortgage payment as an additional payment to principal. Be sure to state that the money is a principal payment rather than a credit toward an early regular payment.

Biweekly mortgage payments can be a great option compared to monthly mortgage payments if the situation is right and your lender allows them. Be sure to check out all of the conditions and cautions before changing the way you pay your mortgage.

APM is here for you and happy to help answer your questions as you consider your home loan options. Contact one of our friendly loan advisors today!



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