Is there such a mortgage called a bi-weekly mortgage where you pay half of your monthly mortgage amount every two weeks? I heard the benefit of this mortgage is that you can cut the life of the loan by several years. Is this true?
There are many people that make bi-weekly mortgage payments, but there are several things to consider when considering this option. A bi-weekly mortgage payment benefits you by allowing you to pay off your mortgage more quickly (several years in some cases) than you would in a traditional mortgage, which can save thousands in interest. It does this in two ways. First, by making bi-weekly mortgage payments, you will make 26 half payments a year (in a 52 week year) instead of 12 full payments in a traditional mortgage. Effectively, you are making one additional mortgage payment a year. Second, the first bi-weekly payment each month is typically credited to your balance in the middle of the month, instead of at the end of the month, which reduces balance more quickly and the interest that you owe.
Before making bi-weekly mortgage payments, remember to check that each bi-weekly payment will be credited immediately to the balance of the loan (and not credited at the end of the month).
If you are looking to refinance your first mortgage, Bills.com makes it easy to compare mortgage offers and different loan types.
I hope this information helps you Find. Learn. Save.