Benefits of a Biweekly Mortgage Program: Paying Your Mortgage Twice a Month vs. Once a Month
I think we can all agree that having and paying off debt is a pain. The excitement of ripping open those paychecks can be wiped out fast when you realize that a big chunk of your income is going toward paying a hefty monthly mortgage. That mortgage, along with other debts and household expenses, can make one of your best investments — your home — feel more like a financial sinkhole. So, how about you shred that debt instead?
If not done properly and paid on time, it can tarnish your credit, which means you’ll pay more for future loans. Instead of burying your head in the sand, take control of your debt using a highly recommended, effective and successful debt repayment strategy touted by many financial planners: Make more than your monthly payment amount each month.
Long-term, high-interest mortgages and other large loans are engineered to benefit the lender, not you. Especially on a standard 30-year mortgage, most of your monthly payment goes to pay interest — profit to the bank — in the early years of repayment. And they’re going to keep charging you interest for 30 years.
That’s a long time.
Many financial experts recommend a simple solution to this dilemma: Pay more than the minimum “standard” payment each month. Even just a little extra paid each month toward your mortgage can make a huge difference. An easy way to do this is by using a biweekly mortgage program.
Here’s how simply a biweekly mortgage payment program works: Your regular monthly loan payment is divided in half and paid biweekly. That means you end up making 13 full payments a year instead of the standard 12. The extra money is applied periodically to reduce the principal of your loan — and the amount of principal you owe is what the bank uses to calculate the interest you’re charged. Less principal owed equals less interest you have to pay! Not only can you save massive amounts on interest and lower the total price, you end up paying for your home and actually pay off your loan faster — meaning you’ll be free of the mortgage and able to apply money to other goals that much sooner.
For example, on a 30-year $325,000 mortgage at 4% APR, you can save more than $36,000 in interest and pay off your loan four years ahead of schedule. Four years!
By making biweekly payments, you can eliminate debt faster while pocketing thousands of dollars to do the things you want to do in life — travel more, take that much-wanted family vacation, buy a new car, or plan for a happy and secure retirement.
At first glance, paying more than your monthly payment may seem like a big change and a painful expense or sacrifice. But it’s not.
Actually, with the right biweekly mortgage payment plan, you can take away a lot of the pain of a conventional monthly mortgage knowing how much interest you’re saving and how much sooner you’ll be debt free. You can use a service like AutoPayPlus to take the hassle out of doubling up those payments, giving you peace of mind knowing that everything’s taken care, and freeing up more time to concentrate on a full, happy life and your future goals.
How great is that? You gain significant benefits while your debt is managed for you.
AutoPayPlus can work with you to create the ideal biweekly mortgage program to help you pay down debt faster. Withdrawals from your account every other week fit conveniently with paychecks and monthly budget, while an extra half payment twice a year toward principal reduces interest over the life of the loan. Please visit our website to learn more.
Use the AutoPayPlus Biweekly Mortgage Calculator to try out different scenarios applying biweekly payments to your mortgage, auto, student and other large loans. See the benefits of biweekly for yourself!