Do you wish you could pay off your home mortgage loan more quickly than with a traditional 30-year fixed rate loan, significantly reducing the amount of interest you pay over the life of the loan? Well bi-golly, a Biweekly Mortgage may be right for you.
Biweekly Mortgage payments are made every two weeks, resulting in 26 (sometimes 27) payments per year. As a result of the number and frequency of payments, you can pay off the loan faster than with a traditional 30-year, fixed rate, monthly payment mortgage. For example, a loan that ordinarily would take 30 years to amortize fully could be paid off after just 23 years of biweekly payments depending on the interest rate of the loan. A Biweekly Mortgage may also save you interest expenses over the life of the loan. For example, a $150,000.00 loan at 7 percent rate paid monthly over 30 years will cost a borrower approximately $53,000 more in interest over the life of the loan than a Biweekly Mortgage for the same loan amount and interest rate.
I’m not sure about you, but an extra $53K might come in handy someday.
One thought on “Biweekly Mortgages”
Good stuff, Tom. Those of us with mortgage rates that are low relative to current rates can approximate the advantages of a bi-weekly mortgage by taking the monthly payment, dividing it by 12, and adding that amount to our monthly payment as a principal reduction.