If you’re looking for ways to pay off your mortgage faster and save on interest, biweekly mortgage payments might be worth considering. But what exactly are biweekly payments, and are they right for you? In this blog, our expert mortgage lenders will break down the pros and cons to help you decide.
What Are Biweekly Mortgage Payments?
Biweekly mortgage payments mean splitting your monthly mortgage loan payment in half and paying that amount every two weeks. Since there are 52 weeks in a year, this equates to 26 biweekly payments, equivalent to making 13 monthly payments annually instead of 12.
The Pros of Biweekly Mortgage Payments
- Pay Off Your Mortgage Faster: Making an extra payment each year means you can pay off your mortgage sooner than scheduled. This can shave years off your repayment period.
- Save on Interest: By reducing your principal balance faster, you pay less interest over the life of the loan. The savings can be significant depending on your interest rate and loan amount.
- Build Equity Quicker: Faster repayment means you build home equity more quickly. This is beneficial if you need to borrow against your equity in the future or decide to sell your home.
- Easier Budgeting: For some people, paying half the mortgage amount every two weeks fits better with their pay schedule, making it easier to manage finances and budget effectively.
The Cons of Biweekly Mortgage Payments
- Limited Flexibility: Once you commit to a biweekly payment plan, switching back to monthly payments can be challenging if your financial situation changes. This rigidity can be a drawback if you need more flexibility.
- Potential Fees: Some lenders charge fees to set up biweekly payment plans. Before committing to this payment method, it’s essential to read the fine print and understand any additional costs.
- Requires Discipline: Making biweekly payments requires consistency and discipline. Missing payments or failing to adhere to the schedule can negate the plan’s benefits.
- Not Always Offered by Lenders: Not all lenders offer biweekly payment plans. You may need to set one up yourself, which involves consistently making the extra payments manually.
How to Set Up Biweekly Payments
If you’re interested in biweekly payments, check with your mortgage lender to see if they offer this option. If they don’t, you can still create a biweekly payment plan by setting aside half of your monthly payment every two weeks and making an additional payment each year. Be sure to indicate to your lender that the extra payment should be applied to your principal balance.
Stay Tuned to Homespring Mortgage for More Tips from Our Dedicated Mortgage Lender Team
Biweekly mortgage payments can be a great way to pay off mortgage loans faster and save on interest. However, they require commitment and may involve additional fees. Weighing the pros and cons will help you decide if this approach fits your financial goals and lifestyle.
At HomeSpring Mortgage, our Greater Charleston, SC, mortgage lender team is here to help you navigate your mortgage options and find the best solutions for your needs. Contact us today to learn more about how our mortgage company can assist you in achieving your homeownership goals.