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Personal Financial Budgeting Information Resource; dedicated to: Provide useable information and products to assist those wanting to improve their Financial Health and Wellness by utilizing affordable eBooks and free self help information in: personal budgets, family home budgets, personal financial plans, business opportunities, making money from home, home based business, credit repair, credit score improvement, investments, and insurance.

Bi-Weekly Mortgage Payments

Do they work?

The truth is bi-weekly mortgage payments do work. In fact, they can save you thousands of dollars and cut to 5-7 years off of a 30 year mortgage. It is not necessary to pay anyone or any company to do this. Most mortgage lenders offer a bi-weekly mortgage plan and you should be able to set it up with direct deposit by contacting your lender. Use the bi-weekly calculator to find your savings.

How does it work?

Paying bi-weekly, allows you to make 26 payments instead of 25, causing you to make one extra payment per year. In addition, you are paying down some of the principal balance early, lowering your interest charges. The down side to this is that it is generally done by direct deposit and may be difficult for some with bi-monthly or monthly paychecks. Something to remember is that because it is done by direct deposit, the money must be in the bank for the withdrawal at the same time every month with no leeway. The bi-weekly Payment option works great for those with consistent bi-weekly paychecks, you just set it up and forget it. Another option to consider, is paying an extra payment to the principal balance of your loan every month.

Extra monthly payment

Paying an extra monthly payment to the principal balance of your mortgage per year can be done a couple of ways. You could pay it in one lump sum or pay an additional amount monthly. If you choose the lump sum, you could utilize your tax return or savings account to save for the extra payment. This requires a lot of discipline. You will either have to put money away every month or use a fairly large tax return to make your payment. Neither are very desirable. If you have a tax return large enough to make an extra payment per year you should seriously consider changing your withholdings and utilize the additional monthly income to increase contributions to your tax deferred retirement plan or pay the additional monthly amount to your mortgage. Additionally, if you can save the money in a savings account every month, you should be able to just pay it directly to the mortgage principal. This is my preferred method and the one I use.

How does it work?

Paying an extra amount to the principal balance of your mortgage works by decreasing the amount of interest you pay over the life of the loan. just like the bi-weekly payment it can save you thousands of dollars and cut as much as 7 years off the life of your loan. For an example I will use a $150,000 mortgage with monthly payments of $899.33 with a 6% interest rate. The extra amount to add to your payment would be $899.93 divided by 12. This is approximately $75.00, increasing your payment to $975.00. This results in an interest savings of approximately $33,922. and cuts almost 7 years off the life of your loan. Use the additional monthly payment calculator to find your savings. If you don't think you can come up with the extra amount needed for your payment, take a look at our eBooks Financial Health And Wellness and 6 Steps to Financial Health And Wellness. [Click Here].

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