Mortgage payments are a recurring expense that most homeowners must face. But did you know that making bi-weekly mortgage payments instead of monthly ones can help to reduce the principal amount owed on your mortgage? In this retrospective post, we’ll take a closer look at bi-weekly mortgage payments and their impact on principal reduction.
First, let’s define what bi-weekly mortgage payments are. Bi-weekly means every two weeks, which reduces the number of months in a year from 12 to 26. Instead of making one payment each month for 12 months, you make half of your regular monthly payment every two weeks for 26 periods per year. This results in an extra full payment being made each year without even noticing it.
By paying more frequently throughout the year with bi-weekly payments, you will end up reducing the total interest paid over the life of your loan because there is less time in between each payment where interest can accrue. Plus, since you’re essentially making an additional month’s worth of payments per year without even thinking about it; it helps cut down on how long it takes to pay off your loan.
Another key benefit to using this method is that by making biweekly payments towards the principal amount owed rather than just paying interest only (as many people do), homeowners can significantly reduce their overall debt load more quickly and efficiently while also building equity faster as well!
It’s important to note though that not all lenders allow or offer this option so be sure to check with them first before deciding if this approach would work best for you. Making sure any fees associated with setting up a program like this are minimal should also be taken into consideration.
In general, when evaluating whether or not making biweekly mortgage payments is right for you remember: It’s important to consider both short-term and long-term benefits as they relate specifically to your individual financial situation. By taking advantage of these types of options available, you can ultimately reduce the amount of interest paid over time which in turn saves money while also working to pay off debt faster.