What Advantage Is There With Mortgage Plans That Have Bi Weekly Payments

What Advantage Is There With Mortgage Plans That Have Bi Weekly Payments

What Advantage is​ There With Mortgage Plans That Have Bi-weekly Payments?
Some mortgage companies allow you​ to​ set up your mortgage so that you​ are making bi-weekly payments .​
This allows you​ to​ pay off your mortgage at​ a​ much faster rate .​
While certainly not for everyone,​ here are some things that you​ need to​ know as​ to​ why you​ may want to​ consider getting your mortgage with bi-weekly payments.
The most beneficial bi-weekly payment option,​ which is​ a​ true bi-weekly mortgage payment plan,​ will take payments out every two weeks .​
Yes,​ they like the​ automatic payments - probably better for you,​ too,​ that way you​ do not have to​ worry about late payments .​
The first payment is​ half of​ your monthly mortgage payment,​ and then the​ second one is​ also half .​
All together,​ you​ will have paid the​ equivalent of​ 13 months of​ payments in​ only 12 months .​
The difference in​ programs that have bi-weekly payments makes a​ real difference in​ how much you​ end up paying .​
This means that you​ need to​ understand exactly what happens with the​ payments when the​ company gets them .​
What you​ want is​ to​ have your lender apply the​ payment to​ the​ mortgage on​ the​ very day that they receive it .​
This will give you​ a​ nice reduction in​ interest .​
Other lenders,​ not wanting to​ lose some of​ that sweet interest,​ put your payments into another account,​ and then when they have a​ full payment for each month,​ pay for that month .​
Also,​ at​ the​ end of​ the​ year,​ when they have the​ full 13th payment,​ then it​ gets applied .​
What a​ difference it​ will make over the​ years in​ the​ interest that you​ pay when the​ lender fools around like this with your money .​
What you​ want is​ for the​ payment to​ be credited to​ your account when you​ make the​ payment .​
A similar effect can be obtained if​ you​ make an​ extra payment each year on​ your own,​ but the​ savings will not be quite as​ good .​
Being that with a​ real bi-weekly payment plan,​ you​ could pay off a​ 30-year mortgage in​ about 18 to​ 22 years,​ the​ potential savings are tremendous .​
It is​ possible to​ save about $34,​000 for each $100,​000 that is​ owed .​
Anytime that you​ make extra payments on​ your mortgage - the​ effect is​ the​ same - reduced interest rates .​
Bi-weekly payments allow you​ to​ have big savings on​ your mortgage,​ and will also allow you​ to​ build up equity in​ your home at​ a​ much faster rate,​ too .​
If you​ already have a​ mortgage,​ your lender may not allow you​ to​ easily switch to​ a​ plan with bi-weekly payments .​
Since it​ involves more work for them,​ they may not want to​ be bothered and may not even offer such a​ program .​
Even if​ they have it,​ about the​ only way some lenders would allow you​ to​ make the​ change would be for you​ to​ refinance your mortgage and then all fees would apply,​ including points .​

A bi-weekly payment mortgage plan is​ also a​ little higher in​ interest because of​ the​ added work for the​ mortgage lender .​
Be sure to​ look at​ all the​ fees that may apply,​ and then compare offers thoroughly before you​ buy.

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