Did you know that paying your mortgage twice a month vs once can significant cut the cost of your mortgage over time?
Not only does this strategy pay off your mortgage faster and reduce the total amount of interest you pay.
With a traditional monthly mortgage payment, you make 12 payments per year, which is equivalent to paying one extra payment per year. By paying your mortgage every other week, you end up making 26 half-payments, which is the same as 13 full payments per year. This means you are essentially making one extra payment per year, which can help you pay off your mortgage faster and reduce the amount of interest you pay.
For example, let’s say you have a 30-year mortgage with a 4% interest rate and a monthly payment of $1,000. If you continue making monthly payments, you will pay a total of $359,823 in interest over the life of the loan. However, if you switch to biweekly payments, you will pay a total of $317,736 in interest, which is a savings of $42,087.
While the savings may not be significant on a monthly basis, over the life of a 30-year mortgage, the difference can be significant. It’s important to ask your lender HOW to do this properly to not incur any late fees, but once you have an approved plan this is we great way to save in the long run!