Does It Improve Credit History?

Does It Reduce the Interest?

How Does the Math Work?

What's the Downside?


Is Making Biweekly Mortgage Payments a Great Idea?

Suzanne is a content online marketer, writer, and fact-checker. She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies.

If you are a property owner with a traditional mortgage who makes month-to-month payments on your home, you may have found out about biweekly mortgage payments as an option to traditional payment strategies. The reasoning is that increasing the frequency of the payments reduces the interest that develops and, throughout a 30- or 15-year mortgage, that can equate to years of payments removed from your loan. However, biweekly mortgage payment programs usually carry additional costs and require consenting to a larger payment quantity.

Before you register for biweekly payments, it 'd be a good idea to weigh the benefits and disadvantages of this type of program to figure out whether it will actually conserve you any money.

- Some biweekly payment programs provided by lending institutions are not the very best monetary choice for the homeowner.

• Committing to biweekly mortgage payments can be challenging on a tight budget plan.
• Biweekly mortgage payments won't necessarily enhance your credit rating.
• Making extra payments towards the principal of your mortgage is a method to minimize your interest payments over the life of the loan. You don't need a formal arrangement to do this.
• In any case, ensure your mortgage doesn't featured an early prepayment penalty. That will damage any strategy for settling the loan early.
  
  milan2099/ Getty Images
  
  Will Switching to Biweekly Payments Boost My Credit History?
  
  Using a biweekly payment schedule set up by your mortgage loan provider puts you on an automated withdrawal strategy that ensures that your payments are made on time.
  
  If you're the type of person who misses payments from time to time because you forgot to write the check, an automatic payment schedule will improve your credit since your payments will be on time. However, you can get the same benefit with an automatic monthly payment.
  bloglines.com
  Will Biweekly Payments Reduce the Interest I Pay?
  
  The idea that biweekly payments will reduce your interest payments may be a myth. Why? Because, depending upon the particulars of your loan, there is a great chance that the company receiving your mortgage payment isn't the company that holds the loan.
  
  Although you're paying twice each month, the servicer getting your payment isn't making biweekly payments to the business that owns your loan. It's most likely that they're most likely holding the payment in an account till the end of the month.
  
  But will you still be lowering the interest that is building up with time? Yes. Remember that each fiscal year has 52 weeks. If each month has 4 weeks that equals 48 weeks. So, biweekly payments don't include two payments each month but rather amount to 26 half payments-the equivalent of 13 month-to-month payments in a year.
  
  Some mortgage business do not accept biweekly payments on mortgages, so you need to ask ahead of time before registering for a biweekly payment plan through a third-party lender.
  
  How Does the Math Work on Biweekly Mortgage Payments?
  
  It works like this: Biweekly payments are equal to 13 month-to-month payments in a year, while standard regular monthly payments amount to 12 payments each year.
  
  By paying an additional month every year, you're paying extra principal, which shaves 6 to 8 years off the life of the loan over time.
  
  But do you need to make biweekly payments to do that? Instead, you might divide the total of one month's payment by 12 and add that quantity to your monthly mortgage payment.
  bloglines.com
  If you're paying $1,500 monthly, divide 1,500 by 12 and make your month-to-month payment $1,625. Speak with your mortgage business initially to ensure there isn't something more you have to do to make certain the additional money is used to the principal amount of your loan.
  
  What's Wrong with Biweekly Mortgage Payments?
  
  There are possibly two problems with opting for a lending institution's biweekly payment program:
  
  - There are typically costs connected to this payment strategy. That eats into the quantity you're saving by accelerating your payment schedule.
  - You may, like many American customers, currently have enough legal payment obligations in your life. Unless you have considerable financial reserves, you may wish to keep some versatility in your budget plan rather than dedicating to biweekly payments.
  
  Remember, you can always make an additional payment when you get three in a month, get a tax refund, or enter a windfall. You don't have to contractually obligate yourself to do it on a monthly basis.
  
  Why Are Biweekly Mortgage Payments an Excellent Idea?
  
  There are a couple of benefits to biweekly mortgage payments. They consist of:
  
  - Settling your mortgage faster, and paying less interest over the life of the loan.
  - Building equity in your house quicker.
  What Are the Downsides of Biweekly Mortgage Payments?
  
  Signing a formal contract to make biweekly mortgage payments has a number of possible drawbacks:
  
  - There are often charges involved and they will consume into the amount you're conserving by increasing your annual mortgage payment.
  - You're locking yourself into a dedication to pay a bigger quantity every year. If your budget plan takes a hit from another instructions, you might regret that.
  What Are Other Ways I Can Pay For My Mortgage Faster and Cheaper?
  
  You can pay off your mortgage earlier and minimize your interest expenses without devoting to a biweekly mortgage payment. For instance, you can utilize a perk or an unanticipated windfall to settle a chunk of your mortgage. If you get a tax refund, put the money against your mortgage.
  
  Whatever you do, make sure that you call your mortgage holder in advance and make sure that your additional payment will be applied against the principal of your mortgage loan.
  
  There are ways to pay for a mortgage without registering for a plan that may come with costs connected. The advantages might not outweigh the gains of a biweekly mortgage.