What are bi-weekly payments and how can they save me money?
Just as the name suggests, bi-weekly payments are made every two weeks and are equal to one half of your monthly mortgage payment. Bi-weekly payments can be beneficial as they will assist in paying down your principal loan balance quicker, and will therefore equate to significant interest savings paid over the life of the loan. The reality is that you are making one extra mortgage payment per year. (Figure 52 weeks divided by payment every 2 weeks = 26 half payments or 13 full payments). This extra yearly payment may seem insignificant, but on a $150,000, 30 year fixed mortgage at 6%, you will save $37,000 in interest over the life of the loan and be able to pay off the loan 5.5 years early. Most banks and mortgage companies will accept a bi-weekly payment schedule. You simply have to call a customer service representative to request it.
