Using a Bi-Weekly Mortgage Saves Money and Reduces Mortgage Repayment Time

With the housing market still on shaky ground and mortgage interest rates at record lows, many are trying to save money by refinancing or modifying their home loans. For many a refinance is just not possible for a variety or reasons. For these individuals, there may be another option to save interest paid on your mortgage as well as reduce the total number of payments left over time.

A bi-weekly mortgage loan enables a borrower to make payments every two weeks towards his principal instead of making a single monthly payment. The advantage of this type of payment is that it is exactly half the amount of the monthly payment.

While taking out a mortgage loan, you should shop around thoroughly and take out one that you will be able to pay off within a definite time period. Other wise, you will have to opt for home loan modification to repay your home loan.

How does the bi-weekly payment work?

In a bi-weekly payment, you make 26 payments in a year since there are 52 weeks. You need to know that if you simply make two payments every month, then this would equal to twenty-four payments in a year. Thus, in case of a bi-weekly payment method, you need to make two extra payments every year which is similar to making one extra payment every month.

It may happen that you cannot afford to make the payments on your home loan. In such a situation, it is advisable that you go for home loan modification. Loan modification is the process of altering the terms and conditions of the loan so that you can afford to make the mortgage payments on time.

How can you make bi-weekly mortgage payments?

Moving to a bi-weekly payment will allow any borrower to pay after every two weeks. Before choosing this option, you need to have a talk with your mortgage lender and discuss with him about the proposal that you are thinking of. Make it a point to see that your lender agrees to accept bi-weekly mortgage payments on your home loan. It has been found that usually most of the lenders agree to accept it but you need to know that there are some exceptions too. So, you should always approach your mortgage lender before taking any step on your own in making your mortgage payments.

You need to be sure that your mortgage lender is not charging any penalty from you for prepaying your mortgage. These days most of the mortgage lenders do not charge any prepayment penalty but there are still few lenders who may charge the extra fine from you for repaying your home loan earlier. It is advisable that you make sure you will not be charged any extra penalty from your lender for paying off your mortgage loan earlier.

Thus, it can be said that bi-weekly payments is an efficient way to pay off your mortgage loan. But, you need to be very careful about the different scam mortgage companies present in the market. It may happen that your mortgage lender does not agree to accept your bi-weekly payments. However, you can still make the bi-weekly payments on your home loan by making one extra monthly payment every year.