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One of the most important choices when financing a home mortgage is the payment frequency. If there was ever a little secret about how you could save lots of money in interest and payoff you mortgage faster this would be it. Most people already know the standard payment option on a mortgage is a monthly payment option. With this option you pay (1) full payment a month for a total of (12) payments a year. For more information on this option be sure to visit our monthly payment option. The big money saver is the bi-weekly mortgage payment option. With this option you pay (1) half payment every (2) week weeks for a total of 26 payments a year. For more information on this option be sure to visit our bi-weekly payment option.
We want to show you the difference between the savings of the bi-weekly payment option over the monthly mortgage payment option. Lets say you pay $600 a month on a $100,000 loan at 5% interest.
| Payment Frequency |
Time to pay off |
Total Interest you will pay |
Number of Payments |
Monthly
($600.00) |
23 years, 11 month(s) |
$71,085.40 |
287 |
|---|
Bi-Weekly
($300.00) |
20 years, 6 month(s) |
$59,976.35 |
535 |
|---|
You can see from the example above that you would benefit from having the bi-weekly mortgage payment option. In the example above you would payoff your balance 3 years and 5 months sooner and would save $11,109.05 in interest over the life of the loan.
When setting up a bi-weekly mortgage payment option, there are some fees associated with it. Most companies charge a setup fee of anywhere from $50 to $350. This is a one time fee. This money is probably the best money spent when it comes to a mortgage. You spend $350 to save you a little over $11,000 in interest and you payoff your debt a little over 3 years sooner.
If you already have your loan setup on a monthly payment option, there are still people that can help you get set up on a biweekly payment option. If you already have a loan visit our bi-weekly payment option and see how much money in interest this option can save you.
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