Have you seen an advertisement offering to save you thousands of dollars on your thirty-year mortgage and cut years off your payments? That’s usually a pitch for a biweekly mortgage payment plan – and while the math behind it is real, it’s worth understanding before you pay a company to set one up for you.
How it works
Instead of twelve monthly payments a year, you pay half your monthly payment every two weeks. Since there are 26 two-week periods in a year, that works out to 13 full monthly payments annually instead of 12 – one extra payment applied toward principal each year.
What it actually saves you
That one extra principal payment a year can shave several years off a thirty-year loan and save a meaningful amount in interest over the life of the loan.
Do it yourself, for free
Most lenders will let you simply make one extra full payment per year (or add a bit extra to each monthly payment) without enrolling in a third-party biweekly program – achieving the same result without the setup fees some companies charge.
Want to know if this makes sense for your loan? Call Dockside Realty at 850.225.9785 or email christine@docksiderealtyinc.com.