Is it better to do monthly or biweekly mortgage payments?
Biweekly mortgage payments vs monthly:
Only those who do not own a home know the beauty of a home! We can say that owning a house is a basic need or essential thing for everyone in this world.
Many people build such houses by mortgaging their property, jewellery, and land to raise money and build something for themselves. I am glad if you are one of them – because no matter how hard your life may be, be happy that you now have a home of your own. because
It seems to me that it is an important point to be recorded here that even today many people are struggling without even a small house of their own.
It would be great if you had some options with the mortgage payment on your hard-earned home! Don’t worry, I am going to write about these only in this article. So here you will get all the information in detail like how mortgage payments work, how to pay mortgage easily, and the pros and cons of monthly versus biweekly mortgage payments.
How do mortgage payments work?
There are generally two reasons on your part to take out a loan (very large amounts) – 1) to buy or build a new home and 2) to build up the finances needed to start your own business.
If you are taking a loan for any of these two reasons then it is a completely legitimate need. However, you are not going to be charged interest for this, are you?
Usually, the amount you borrow is called the principal of your loan – the fee they charge you for this loan is considered interest.
Note: Here you are advised to pay the loan amount – month to month as “Cash”.
It is defined as principal + interest = your total loan amount. Accordingly, the monthly loan amount you pay here is divided into two instalments. This means that one part of the loan amount you pay is the principal and the other part is the interest on the loan.
These must be paid on time every month. Even if you don’t pay for a month or two, your interest rate will continue to increase. It is important to note that when this situation comes to you, you will have to pay interest on top of your principal amount.
Monthly mortgage payments
The repayment schedule of mortgage loans is fixed to a certain date once a month. With this, you will be able to arrange your mortgage loan amount, date and payment amount in a clear structure before your eyes.
Even if we start raising money to build a house today, no one can say with any degree of accuracy how many years it will take to finish or complete it. Because we cannot say that the cost of buying or building a house today will be the same in 10 or 15 years – first understand clearly that this is due to inflation.
Same… if you take out a loan to build or buy a house – you can even pay off the total amount on a “month-by-month” budget! Although there are a lot of risks involved, these are considered practical.
Note: If you are looking to see if any of these functions have easier ways to pay off your mortgage – feel free to search for “Automatic Mortgage Payments”.
If you are looking to pay off your mortgage loans quickly then “this scheme or method” will not be of many benefits to you. Also, if you think you can stick to a bi-weekly mortgage payment routine – understand that this will leave you with a huge debt load, costs, and long-term interest charges – even if your mortgage rate is very, very low!
Biweekly mortgage payments
By making bi-weekly mortgage payments “that’s half of the monthly payments” throughout the year, you’re going to have a major advantage! Let’s see clearly what it is…
Do you pay less interest with biweekly payments?
Your foreclosure process is done 26 times a year when you typically make bi-weekly mortgage payments. This will create a situation where you will have to pay 1 month more than the loan that you pay off 12 times a year.
What happens if I pay 2 extra mortgage payments a year?
I have linked these below with examples:
Let’s say your monthly mortgage payment = is $1,200.
If you paid these regularly every month, you could only pay $14,400 a year.
If you were paying the same rate every two weeks, you could pay up to $15,600 a year.
Note: If you chose the bi-weekly payment option here – your bi-weekly payment will be $600 (half of the monthly payment).
What are the pros and cons of biweekly mortgage payments?
Mortgage Loan Fees:
Payment Mode Monthly ($14,400/ per year) < Payment Mode Bi-weekly ($15,600/ per year).
If you opt for bi-weekly payments – you can easily pay off the extra loan amount every year. With this, your interest rate is more likely to decrease. And this process will give you a higher chance of paying off your loan amount faster.
Drawbacks to biweekly payments
A few lenders may ask you to pay a fee so that their income does not suffer as you go through this process!
When you pay off this loan with your credit card, your “credit score” is not boosted – and there are no negative effects.
How to change to biweekly mortgage payments
Up until now, I have been paying my mortgage every month! But if you think that paying it bi-weekly seems to me to have a lot of advantages – here are some simple ways how you can easily change your mortgage payment agreement. Try to stick to whatever you like or feel is acceptable in it – a good monetary gain “by cutting unnecessary costs”.
Things you should keep in mind while changing your mortgage payment on a bi-weekly basis:
A) First Month Only – You have to pay the monthly and bi-weekly loan amount in full.
B) A fee may be payable to change payment agreements – it depends on the lenders.
C) The extra payment you pay should not be for interest on the loan – ask for it to be paid in the principal or taken as principal (this will gradually lower your annual interest rate here).
D) Don’t try to pay off the loan too quickly! Some lenders may even charge you for this.
Sathish is a full-time blogger and freelance writer with a passion for side hustling, passive income, and the gig economy. True Home Occupations is all about providing people with honest ways to make and save more money by using technology. To learn more about Sathish, read his About Page!
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