does paying bi-weekly reduce the overall sum of mortgage payments?

[BlahBlahYouToo]

if so, how?

 

[FelixDeCat]

Biweekly payments reduce your mortgage balance by taking one full payment of P&I and applying it to principal.

26 drafts = 13 payments

Only 12 payments are required, the last is applied to principal

 

[CPA]

Originally posted by: FelixDeKat
Biweekly payments reduce your mortgage balance by taking one full payment of P&I and applying it to principal.

26 drafts = 13 payments

Only 12 payments are required, the last is applied to principal

semi-monthly != bi-weekly

And, OP, the answer to your question is only if your martgage is a simple interest mortgage, but even then it won't save a lot. Because interest is calculated daily, when you make a payment, interest paid is determined based on the day your payment was applied. On a traditional mortgage, which most mortgages are, the savings is negligible.

If you are going to pay extra, do it Felix's way.

 

[DrPizza]

Good reading material for you:
http://www.bankrate.com/brm/news/mtg/20010920a.asp

 

[BlahBlahYouToo]

Originally posted by: CPA

Originally posted by: FelixDeKat
Biweekly payments reduce your mortgage balance by taking one full payment of P&I and applying it to principal.

26 drafts = 13 payments

Only 12 payments are required, the last is applied to principal

semi-monthly != bi-weekly

And, OP, the answer to your question is only if your martgage is a simple interest mortgage, but even then it won't save a lot. Because interest is calculated daily, when you make a payment, interest paid is determined based on the day your payment was applied. On a traditional mortgage, which most mortgages are, the savings is negligible.

If you are going to pay extra, do it Felix's way.

sorry, i believe the letter stated bi-weekly now that i think about it.

 

[BlahBlahYouToo]

Originally posted by: DrPizza
Good reading material for you:
http://www.bankrate.com/brm/news/mtg/20010920a.asp

thanks, i didn't read the fine print and see if they charged a fee, which i'm guessing they probably do.

i'll just make my own extra payments towards the principal on my own.

 

[EagleKeeper]

Originally posted by: BlahBlahYouToo

Originally posted by: DrPizza
Good reading material for you:
http://www.bankrate.com/brm/news/mtg/20010920a.asp

thanks, i didn't read the fine print and see if they charged a fee, which i'm guessing they probably do.

i'll just make my own extra payments towards the principal on my own.

Make sure that the payment that is intended to be applied to the principal, has it documented taht it should be and/or attach a note.

Some places will just apply it as an early payment.

 

[SoulAssassin]

Some places don't apply the bi-weekly payment until the due date. So let's say you are due on the first and you pay half on the 15th and the other half on the 31st, they don't apply the payments until the first so there is no advantage to making the early payment on the 15th. You are better holding the money in your account and earning whatever minuscule amount of insurance.

YMMV...check with your lender to see how they apply payments.