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Biweekly mortgage payments can save you a lot of money in interest over the life of the loan. Also you will pay off your mortgage about six years sooner just by making biweekly payments. The advantage of biweekly payments is that you are making one extra full payment every year. This can be a great option for any homeowner who can afford to sock away a little extra cash into her mortgage every month. You can't simply mail two checks every month, you must set up this payment plan with your lender.
Set It Up when Buying Your Home
If you are purchasing your home, you can have payments set up at the time of closing. There may be a fee involved, but it can be rolled into your closing costs. This way you will have the payment plan set up from the time you make your first payment. Be sure you can afford biweekly payments since in a month you will be paying more than if you paid one monthly payment.
Call Your Lender Directly
If you are currently in your home and you want to change your payment schedule, you can call your lender and ask if they offer that option. They may charge a fee to do this, so you have to decide if you are willing to pay it. You can have your biweekly payments direct debited so you do not have to to remember to make two monthly payments.
Use a Third Party
There is an option of using a third-party company to pay your mortgage biweekly for you. This will cost you and can be a bad idea if the company pays late or folds. Essentially, the company is debiting your account biweekly by splitting your monthly payment into two payments and charging you every other week. They still pay your mortgage only once a month, but the extra that they are charging you by your paying biweekly is added to your monthly payment and creating the same benefit as a biweekly payment.
Add Extra Each Month
Instead of using a third party or paying to have a payment plan set up with your lender, you can still have the same benefit of the biweekly payments but pay only once a month. The reason you save so much in interest and shorten the loan is that by paying biweekly, you are paying thirteen payments in a year instead of twelve. So, to pay only once a month but reap the rewards of biweekly payments, take your payment and divide by twelve. Add that amount to every monthly payment. Be sure to check the box that says, "Add to principal." You do not want to add any extra money to the interest.
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