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Welcome back! Have you checked out the free webinar on how to establish credit for your small business?
Yesterday’s post was on paying off your mortgage without refinancing. The video below showcases another simple technique: the bi-weekly mortgage. The concept is pretty simple. You pay your mortgage every two weeks instead of once per month. This way at the end of the year you end up paying an extra one to two payments towards your mortgage, lowering the total interest paid and the life of the mortgage.
Something to know is that many mortgage companies will not accept a bi-weekly payment. They may ask you to set up a bi-weekly payment plan for which they might charge you a $5-$10 monthly fee. One way to avoid that is to just have a different account where you have your bi-weekly payment held and then just send it over every time the amount in the account adds up to a full payment.
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I started this blog years ago as a way of keeping myself accountable to my own debt reduction plans. Now I'm using this site to help others get out of debt, and learn about personal finance so that they can live their best lives.
The Bi-weekly mortgage is an excellent idea. But, depending on the interest rate and terms of the new loan it might makes more sense to refinance. But, if you can’t refinance for whatever reason I definitely would suggest the bi-weekly mortgage
I use this method: I calculated what my payment x 12 months was. I added to that what I wanted to pay extra a year. Took that total and divided it by 26 and also by 12.
I took the result by 26 and have that transferred to savings every payday. I then took the result divided by 12 and that is what I draft from my savings account to the mortgage company each month.
example: 1000.00 payment x12= 12000.00 + extra 1000.00 =13000.00
13000/26= 500.00 to savings each payday
13000/12=1084.00 (rounded) to mortgage company each month
I also send any ‘found money’ (from rebates, side work, selling stuff) to pay the mortgage off sooner. It is not much, but it adds up.
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I love my bi-weekly mortgage payment — I’ll cut about 2 years off my mortgage with no hassle whatsoever!
The Bi-weekly mortgage is an excellent idea. But, depending on the interest rate and terms of the new loan it might makes more sense to refinance. But, if you can’t refinance for whatever reason I definitely would suggest the bi-weekly mortgage
I use this method: I calculated what my payment x 12 months was. I added to that what I wanted to pay extra a year. Took that total and divided it by 26 and also by 12.
I took the result by 26 and have that transferred to savings every payday. I then took the result divided by 12 and that is what I draft from my savings account to the mortgage company each month.
example: 1000.00 payment x12= 12000.00 + extra 1000.00 =13000.00
13000/26= 500.00 to savings each payday
13000/12=1084.00 (rounded) to mortgage company each month
I also send any ‘found money’ (from rebates, side work, selling stuff) to pay the mortgage off sooner. It is not much, but it adds up.
We have a biweekly mortgage and we will save about $46K over the life of the loan. Pretty sweet!
I agree. This is a good option, but if you are stuck at 6%, and have many years left on the loan, go ahead and investigate a refi.