Hey everybody! Today, I’m tackling a question that could potentially save you a boatload of money if you’re considering buying a home, or already own one and want to save some serious money long term! We’re talking about biweekly mortgage payments – a secret weapon that most lenders won’t tell you about. Let’s dive in and uncover the key to paying off your house faster and saving on mortgage interest.
Unraveling the Mystery of Biweekly Payments
So, what’s the buzz about biweekly payments? Most folks aren’t familiar with this game-changing strategy, mainly because lenders don’t shout about it from the rooftops. Why? Because it saves you money, and they make less in interest. But fear not, I’m here to spill the beans.
Here’s the deal: instead of your usual monthly mortgage payment, consider splitting it into 2 biweekly payments per month. It won’t alter your mortgage terms, just how often you make payments. Think of it like getting paid at a job – are you paid every month, twice a month, or every two weeks? The frequency matters because it can mean extra money in your pocket. Similarly, biweekly mortgage payments can squeeze in an entire extra payment each year.
The Long-Term Payoff
Consider this a long-term investment. On average, making the switch from monthly to biweekly payments can cut your 30-yr fixed rate mortgage down by an average of 6-7 YEARS! I’m not kidding! By paying a bit extra more frequently, you’re not only saving on interest but also putting more towards the principal. It’s like a turbo boost for your mortgage payoff journey, increasing your extra principal paid.
Crunching the Numbers
Let’s break it down with an example. Say your monthly mortgage payment is $1,800. If you switch to biweekly payments of $900, not only do you end up making an extra $1,800 PRINCIPAL ONLY payment by the year’s end, but here’s where the magic happens. Let’s say you decide to round up and pay $1000 every two weeks instead. That additional $100 per payment goes straight to your principal EVERY TIME. That’s ANOTHER $2,600 towards your principal every year!
For those unfamiliar with amortization tables, it’s essentially a roadmap for your mortgage payments. Utilize online calculators to understand how these extra payments can significantly impact your mortgage. The less principal you owe, the less interest you pay every month. Here’s a handy calculator for you to play around with. Trust me, it’s eye-opening.
The Cash Flow Advantage
Switching to biweekly payments not only accelerates your mortgage payoff but also has some practical benefits. It helps level out your cash flow and bank account each month, making your monthly budget more manageable. Instead of one large chunk leaving your account on the first of the month, the biweekly approach spreads it out, creating a more even balance.
Consider the scenario: your bank account stays more consistent, checks aren’t as hefty, and your financial landscape becomes a bit smoother. While this might not be a major benefit for everyone, it’s worth discussing with the other decision-makers in your household.
Your Next Steps
Ready to take control of your mortgage and reap the benefits of biweekly payments? Reach out to your loan servicer or lender to discuss the possibility of making this switch. It’s a smart move for anyone looking to pay off their house faster and has some extra cash flow in their monthly budget. The *CATCH* is NOT ALL loan servicers make this available, some charge a fee to set it up, some charge a monthly fee to process it, and you usually have to call them to set it up. DON’T just start paying partial payments and expect to get the benefits, you have to get them to agree to it.
Book Your Home Buyer Consultation
I’m passionate about helping people invest in themselves through home ownership! If you’re considering a home purchase in the South Denver Metro area, I’m here to guide you through the process. Book your Home Buyer Consultation with me at www.calendly.com/RealtorStacie or give me a call at 720-295-9089. Let’s make your homeownership dreams a reality!
Thanks for spending time with me today, and here’s to helping you save some serious money on your mortgage. 🥂