Could a bi-weekly mortgage be right for you? Homeowner’s all over the nation are changing the way they pay their mortgages.
While monthly payments used to be the standard way the average household paid their house payment, more and more homeowners are changing to a bi-weekly mortgage payment plan.
Why? The answer is quite simple, and quite surprising. Homeowners who are using this up and coming payment method are saving tens of thousands of dollars and paying their mortgages off years in advance.
Think it sounds like a fairy tale? It’s not. By paying your mortgage every other week, instead of once a month, you are making the equivalent of one extra mortgage payment per year, and are shaving years off your mortgage while saving thousands of dollars in the process. How significant are the savings? Take a thirty-year mortgage of $100,000 at 7.875 percent interest. By paying this mortgage bi-weekly, instead of monthly, the homeowner will have their mortgage paid off approximately seven years earlier than if paying a normal monthly payment and will have saved over $40,000 in interest over the lifetime of the loan. That’s a brand new luxury car!
There is absolutely no reason why homeowners shouldn’t take advantage of the savings this method has to offer them. Homeowner’s who use the excuse that they don’t have the money to pay a consultant or firm to set up the plan for them probably don’t realize the plan is rather simple and with the proper tools, they can do it themselves.
If you’re reading this article and you’ve never heard of a bi-weekly payment method, you might be wondering if it’s really as good as it sounds; and if it is, why you’ve never heard of it before. It’s surprising how few people know about bi-weekly payment methods. It could be that banks don’t want consumers knowing about it, because while it saves consumers thousands of dollars, that’s thousands of dollars of profit that the lenders won’t ever see. Profit lost isn’t something banks normally look favorably upon.
Now that you know the option is out there, you may want to look into taking advantage of it.
Written by Craig Romero, Mortgage Analyst
