If you are a homeowner with a conventional mortgage who makes monthly payments on your home, you may have heard about biweekly mortgage payments as an alternative to traditional payment plans. The logic is that increasing the frequency oಞf the payments reduces the interest that builds up and, over the course of a 30- or 15-year mortgage, that c💮an equal years of payments eliminated from your loan. However, biweekly mortgage payment programs typically carry additional fees and require agreeing to a larger repayment amount.

Before you sign up for biweekly payments, it'd be wise to weigh the advantages and disadvantages of this type of program to determine whether it will actually save you any money.

Will Switching to Biweekly Payments B🔜oost My Credit Score?

Using a biweekly payment schedule set up by your mortgage lender puts you on an automatic 澳洲幸运5官方开奖结果体彩网:withdrawal plan that assures that your payments ꦐare made on time.

If you're the type of person who misses payments from time to time because you forgot to write the check, an automatic payment schedule will improve your credit because your payments will be on time. However, you can ℱget the same ben♏efit with an automatic monthly payment.

Will Biweekly Payments Reduce the Interest I P💞ay?

The idea that biweekly payments will reduce your interest payments may be a myth. Why? Because, depending on the particulars of your loan, there is a good chance that the company receiving your mortgage payment isn't the company that holds the loan.

Although you're paying twice per month, the servicer receiving your payment isn't making biweekly payments to the company that owns your loan. It's more likely that they're likely holding the payment in an account until the end of the month.

But will you still be reducing the 澳洲幸运5官方开奖结果体彩网:interest that is building up over time? Yes. Remember that each calendꩵar year has 52 weeks. If each month has four weeks tha𓂃t equals 48 weeks. So, biweekly payments don't consist of two payments each month but rather add up to 26 half payments—the equivalent of 13 monthly payments in a year.

How Does the Math Work on Biweekly Mortg⭕age 🧔Payments?

It works like this: Biweekly payments are equal to 13 monthly payments in a year, while traditional monthly payments are 🦩equal to 12 payments each yꦰear.

By paying an extra month every year, you're paying extra principal, which shaves six to eight years off the life of the loan over time.

But do you have to make biweekly payments to do that? Instead, you could divide the total of one month's payment by 12 and add that amount to your monthly mortgage payment.

If you're paying $1,500 per month, divide 1,500 by 12 and make your monthly payment $1,625. Talk to your mortgage company first to make sure there isn't something more you have to do to make sure the extra money is applied to the principal amount of your loan.

What's Wrong with Biweekly Mortgage Payments?

There are potentially two problems with going with a lender's biweekly payment program:

• There are often fees attached to this payment plan. That eats into the amount you're saving by accelerating your repayment schedule.
• You may, like most American consumers, already have enough contractual payment obligations in your life. Unless you have significant financial reserves, you might want to keep some flexibility in your budget rather than committing to biweekly payments.

Remember, you can always make an extra payment when you get three paychecks in a month, receive a tax refund, or come into a windfall. You don't have to contractually obligate yourself to do it every month.

The Bottom Line

There are ways to 澳洲幸运5官方开奖结果体彩网:pay down a mortgage without signing up for a plan that may come with fee♒s attached. The benefits may not outweigh the gains of a biweekly mortgage.

I♓f you are considering a biweekly payment program to lower your mortgage, it may be wise to investigate whether the plan available through your bank or mortgage service provider works for your budget.