Pros and Cons of a Bi-weekly Mortgage Payment

Pros and Cons of a Bi-weekly Mortgage Payment | Is this for you?

Рет қаралды 9,185

Күн бұрын

Pros of a Bi-weekly Mortgage Payment:
Faster Loan Payoff: By making bi-weekly payments, you end up making one extra payment each year, which accelerates the loan repayment process. This results in a quicker payoff and reduces the overall term of your mortgage, allowing you to own your home free and clear sooner.
Interest Savings: Since interest on a mortgage is calculated on the outstanding balance, making more frequent payments reduces the principal balance faster, ultimately leading to a decrease in the total interest paid over the life of the loan. This can save you thousands of dollars in interest payments.
Budgeting and Cash Flow: Bi-weekly payments can be easier to manage for some homeowners as they align with the typical two-week pay cycle. This can help individuals budget more effectively and maintain better control of their cash flow.
Cons of a Bi-weekly Mortgage Payment:
Less Flexibility: With bi-weekly payments, you are committed to making a payment every two weeks instead of once a month, which could be a disadvantage for those with irregular income streams or who prefer more flexibility in their payment schedule.
Administrative Hassle: Not all mortgage lenders offer bi-weekly payment options, and those that do may charge additional fees for enrollment or processing. Additionally, you may need to set up a separate account or arrange automatic payments, which could be an added hassle for some homeowners.
Opportunity Cost: By making extra payments towards your mortgage, you might be missing out on other investment opportunities with potentially higher returns. Homeowners should carefully consider their financial goals and weigh the benefits of paying off their mortgage faster against the potential gains from investing in other assets.
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Пікірлер: 34

@JefftheMortgagePro Жыл бұрын

Is a bi-weekly mortgage payment right for you? Let's discuss: calendly.com/jeff-trevarthen/15-min-call

@blkfld7850 4 ай бұрын

My plan is to pay it bi-weekly as I'm paid bi-weekly anyway. But additionally I'll pay an addtional $200 per month to principal as well as 2 additional payments per year as I have 2 months where I get 3 checks In a month. Thus taking a 30 year note down to 13 years. At least I hope thats how it works lol

@JefftheMortgagePro 4 ай бұрын

Nice work!

@raemaxey3401 4 ай бұрын

I set mines up before I made my first mortgage payment. I had to call and have them send the paperwork and I mailed it back. I don’t do a bi-weekly mortgage plan (4.5% interest rate) but I do have my mortgage payment set up on automatic payments on the 1st and 15th and that includes an extra 100 dollars to go toward principal. It doesn’t bother me because it comes out before I see the money and I know in the end it will benefit me. Another goal is to start walking more extra payment’s into the bank to pay on my principal as well.

@JefftheMortgagePro 4 ай бұрын

Nice work!

@raemaxey3401 4 ай бұрын

@@JefftheMortgagePro Thank you

@tatianaflorez7858 28 күн бұрын

I;d make that extra payment up front or divide it across several months.

@JefftheMortgagePro 28 күн бұрын

Good idea!

@CandycaneBeyond 9 ай бұрын

Why not just put $$ on the principal each month?

@JefftheMortgagePro 9 ай бұрын

You could do that too. 😉

@JG-yr9tk 8 ай бұрын

What do you mean?

@isaacsmith3901 7 ай бұрын

If you don’t tell your bank to apply extra payments to the principal they may just hold your payment til the next payment due date. By telling them to apply it to the principal they won’t hold payment…. That’s my understanding.

@Motivate_and_Meditate 4 ай бұрын

Thank you, I'm very interested in this going to look more into it.

@JefftheMortgagePro 4 ай бұрын

👍

@Eplics 15 күн бұрын

Say I had a 4000 dollar car payment should I pay bi weekly 2000 or every week which would be 1000 is it better to do quarter monthly cause the total do the loan would be less making the interest per day less

@JefftheMortgagePro 15 күн бұрын

Great question. I'm not sure of the answer. Probably, weekly or biweekly, which would have the same effect.

@sharonstockham5786 Ай бұрын

doesn’t that extra biweekly payment pay the mortgage company more interest in that payment??

@JefftheMortgagePro Ай бұрын

For the first 10 years or so, yes. After that, mostly principal.

@lecf08 12 күн бұрын

For the extra payment you end up doing, would you notify the bank that you want to direct the payment to the principal or just keep paying what's ahead (principal+interest)?

@JefftheMortgagePro 12 күн бұрын

Yes, you can notify the bank, but it's not necessary unless you're doing a recast of $10k or more.

@NickGore 5 ай бұрын

Do you have to notify the bank or arrange anything with them or can you just start making bi-weekly payments on your existing 30-year mortgage that you've been paying monthly on?

@JefftheMortgagePro 5 ай бұрын

I would notify the bank.

@mandypdx 5 ай бұрын

My lender required a form and automatic payment, plus having my payments a month ahead. They would not apply partial payments had i just started doing it manually.

@jorgezuni2818 7 ай бұрын

I owe about 80,000 of mortgage to finalize the total payment. I’m not planing to pay it off , reason. Is I’m still far from Retirment so I need to have a write-off .. so I’m choose. Biweekly with advantage of 13 payment done yearly .

@JefftheMortgagePro 7 ай бұрын

Excellent!

@Jcauto-t4r 2 ай бұрын

The benefits outweigh the cons.. it just that “some months” have less weeks thus by you paying every 2 weeks you will be outpacing those months resulting in more money paid yearly. Bottom line it is better that way, most of people get paid by-weekly anyways. DO IT.

@lindembergl 4 ай бұрын

This last thing you said, makes no sense. It’s the same amount of money split in two payments. How this can be different then pay once a month. It’s the same amount but split in two. The start might be a little difficult because you will meet a extra week payment. Remember, for the following months and years will no make any difference.

@JefftheMortgagePro 4 ай бұрын

Bi weekly is different than semi-monthly. If you pay bi weekly, you'll have 1 extra payment per year.