On your quest to find the perfect mortgage, you’ve probably come across various loan options. During the mortgage process, it is imperative to find a mortgage that meets your needs; one that is transparent and financially beneficial to you. You may or may not have come across it in your research; however, a bi-weekly mortgage could be the right fit for you. Although not every financial institution offers them, they might be the mortgage option you’re looking for. Here is what you need to know about bi-weekly mortgages.
First and foremost, what are they?
Bi-weekly mortgages are mortgage payments made every two weeks rather than once a month. Each payment is equivalent to exactly half of your monthly payment. No extra interest will be charged. For example, a 30 year mortgage of $300,000 with a fixed interest rate of 5% would result in monthly payments of $1,610.46 or bi-weekly payments of $805.23.
How will this benefit you?
One of the greatest advantages of this type of mortgage has to be the financial benefit. Making a payment every two weeks can help save you money over the life of the loan. Often times the loan term is shortened by about four years, if not more. Because you are making payments every two weeks instead of every month, your total payments become 26 half month payments (13 full month payments a year), rather than 12 full month payments a year. The “13th payment” you are making gets applied to the remaining loan balance. This allows you to pay off your loan faster and saves you money on the amount of interest you owe.
Why should you choose a bi-weekly mortgage?
Bi-weekly mortgages allow your home to officially be yours in a shorter amount of time. In a shorter amount of time, you can eliminate the hassle of paying off your mortgage. It may even be easier for you to keep track of smaller payments made every two weeks, as opposed to larger payments every month. You will be paying less interest in the long run and for many, being able to split a large payment up into two smaller payments during a month is beneficial for a budget.
To learn more about bi-weekly mortgages and speak to an experienced lender, schedule an appointment today.
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