To "Bi" Or Not To "Bi" : That's A Good Question Should You Be
Making Biweekly Payments?
To "Bi" or not to "Bi": That's A Good Question - Should You Be
Making Biweekly Payments?
You've heard about them. You may even do them. But is a
biweekly mortgage payment plan the best choice to pay off your
mortgage early and gain equity on your home faster? Well, the
answer is both yes and no. Like most things in life, it all
depends on how you look at it.
Yes, of course, more is better - payments that is. Making
biweekly payments is equivalent to making thirteen full payments
per year rather than twelve. Not sure?...Fifty two weeks divided
by 2 (biweekly) is 26. So, you'd have 26 half payments which
comes out to 13 full payments per year. Depending on the
particulars of your loan, this can take roughly up to 7 years
off of your 30 year mortgage term! Great! Yes, that is great.
So, what could be better than this? Well, nothing really unless
you are quite good at self-discipline. You see, to set up the
biweekly payment plan costs you money. Generally, in the ball
park of $150-$200. Not much really if you weigh the expense
relative to other loan expenses. And well worth it to reduce
your mortgage term and save thousands! However, if you are
self-disciplined about your finances and want to get the same
results, why not just make an extra payment each year on your
own and forgo paying someone else to set up the biweekly system?
Or, you could take your mortgage payment and divide it by 12 and
tack on the extra each time you make your once-per-month
payment. Sounds easy. But let's be honest. Will you actually do
it?
If you have this kind of discipline with your finances and
you've got the extra funds to cover it, by all means, put the
extra money down on your own! If you're like most of us,
however, pay the small fee to get the biweekly plan set up. It
will save you money over the life of the loan, provide the
discipline for you, and give you peace of mind with the results
you desire.