Just because a mortgage is typically paid once per month, doesn’t mean you have to stick to the traditional one payment per month mortgage model. A sometimes overlooked way of making mortgage payment is the bi-weekly payment option.
If you’ve never heard of bi-weekly mortgages or how they work, you’re probably not alone! But just because you haven’t heard of them doesn’t mean they’re not the right option for you. Bi-weekly mortgages have many benefits for homebuyers that should be explored before making a mortgage decision!
What is a Bi-Weekly Mortgage Payment Option?
Bi-weekly payment options involve payments made on your mortgage twice per month, bi-weekly, instead of once per month. This does not double your payment, but actually allows you to split your monthly payment in half to pay on the bi-weekly schedule. Not only does this work well for some people’s pay schedules, it also allows you to pay down your mortgage faster than on a one per month payment schedule. This therefore reduces the overall amount of interest you pay on your mortgage. Does that sound good to you? There’s more!
Benefits of a Bi-Weekly Mortgage
• Pay Off Your Mortgage Faster & With Less Interest
When you make mortgage payments on a bi-weekly schedule, there are two extra weeks per year where you are accumulating extra payments against your total principal amount. This means you can pay off your principal and own your home outright faster.
• Less Interest
Since you’re able to pay off your principal quicker, this means you will pay less interest on your borrowed amount in the long run compared to making monthly payments.
• Build Home Equity
A bi-weekly mortgage helps you build the equity you have in your home. The faster you reduce your mortgage arrears, the quicker you build more equity into your home.
You should research all of your mortgage options before making a final decision; however, a bi-weekly mortgage may have more benefits for you as a homebuyer than a traditional mortgage. For more information about bi-weekly mortgages and to start the mortgage process, schedule an appointment with us today!
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