Are Biweekly Mortgages Really Worthwhile?

You may have heard people, especially mortgage lenders, extolling the virtues of biweekly payments, saying that you can save thousands of dollars and take 5-7 years off your mortgage--and then offering to set up a biweekly plan for you for as little as $400. But you don't have to spend $400 to begin saving money and time on your mortgage. In fact, you don't have to spend anything at all! You can set up a money-saving mortgage payment plan yourself--easily and at no extra cost.

The key is to look carefully at the fine print in many biweekly plans. You find that even though you'd be making biweekly payments, the lender may only post them to your account on a monthly basis, which means that you wouldn't be saving anything on interest, because mortgage interest is paid in arrears (as opposed to rent payments, which are paid in advance). Your only real savings would be in the fact that you'd be making the equivalent of one extra payment a year. That's a good thing, of course, but you don't need to pay someone $400-500, possible monthly maintenance fees, to be able to accomplish the same results.

Here's how biweekly payments save time and money: By making biweekly payments, you actually end up making an extra monthly payment each year. Over the course of a year, you'd make 26 payments (one every other week for 52 weeks), which is the same as making 13 monthly payments. Making one extra payment per year will shorten the life of your loan and save you thousands of dollars.

But you don't have to make biweekly payments to obtain those savings. Here are a couple examples of how you can save big money, using the same basic idea:

If you get paid every two weeks, divide your monthly principal and interest payment in half and then send your lender a check for that amount during those months in which you receive three paychecks. Just sending in those two extra checks will be the equivalent of one extra payment a year.

If you don't want to send lump checks, you can get the same results by dividing your monthly principal and interest payment by twelve and then adding that extra amount to your payment every month. Normally, that figure won't put too much extra strain on your budget, and it will add an extra mortgage payment to your loan every year.

You really can save significant amounts of money and shorten the life of your loan by making extra payments, but you definitely don't have to pay a lender $400-500 to do it. Making those extra payments is easy to do yourself, and at no extra charge--which is always a good thing.

Copyright © 2005 Jeanette J. Fisher All rights reserved.

Professor Jeanette Fisher is the author of "Doghouse to Dollhouse for Dollars," "Credit Help! Get the Credit You Need to Buy Real Estate," and other books. Real estate financing questions? Visit the new Real Estate Credit Help Center for articles, Credit Tips ezine, and blog: http://www.recredithelp.com

---

Getting the Best Homeowner Loan for Your Money

With so many lenders out there, it can be hard... Read More

The Real Truth About Those: Online Get a Better Loan Web Sites - 6 Things to Look For

You have seen the Commercials on TV go this or... Read More

First Time Buyers Fail To Shop Around

Almost two thirds of first time buyers accept the first... Read More

What is a Buy To Let Mortgage?

A buy to let mortgage is a mortgage on a... Read More

Mortgage Sales Hit Problems

The housing market has been buoyant over the past few... Read More

Home Equity Loans in Texas

A few notes of importance: This only applies to... Read More

Essence of Self Certified Mortgages

Your search for a mortgage isn't leading results.Check for any... Read More

Home Equity Loans - How To Use Your Homes Equity to Consolidate Debt

If you've got a wallet full of credit cards, and... Read More

A Personal Mortgage Experience

I don't know what the mortgage situation is around the... Read More

Bad Credit Home Loans - Pre-Approval is Still Possible With Adverse Credit History

If you are among the millions with less than perfect... Read More

Benefits of a Remortgage

There are many benefits in choosing a remortgage, some of... Read More

Option ARM ? The World?s Most Dangerous Mortgage

Home prices have reached record levels, and in many parts... Read More

No Fee Mortgages Coming Soon

Buying a home, especially for the first time, can be... Read More

Mortgage-Refinance Treachery: Avoid Mortgage Bankers and Brokers Biggest Trick -- The Sales Pitch

What the average homeowner or home buyer fails to realize... Read More

Remortgages Guide

Outlined below is a useful remortgages guide. Remortgaging has become... Read More

Residential Mortgages ? a Step Ahead on the Property Ladder

Doesn't Residential mortgage give the impression that they are a... Read More

Jumbo Home Mortgage Loans - What They Are and Where To Get Jumbo Loan Financing

A jumbo mortgage is different than a conforming loan. A... Read More

FHA Mortgage: When Your Downpayment is a Gift

There has been so much fraud discovered in the FHA... Read More

Using a Home Mortgage Calculator

There are a variety of tools online that you can... Read More

Home Equity Loan Improvements

There's more Regulation Z compliance on the way, courtesy of... Read More

Need a Mortgage, Refinance or Equity Loan? Learn What it Takes, Before Applying

Do you know what it takes to qualify for mortgage... Read More

Choosing The Right Buy-To-Let Mortgage

Buy-to-let took off during the 1990s with the increasing availability... Read More

Understanding UK Bridging Finance

Bridging finance, also referred to as "bridge loans" and "bridging... Read More

Mortgage Loan Most Bankers Wont Give May Be Exactly What You Need to Buy or Refinance Your Home

A few years ago, a loan officer who worked for... Read More

Free Home Equity Loan Information

Home equity loan information can sometimes be confusing and misleading.... Read More

Mortgage Refinance - Tips to Help You Cut Fees and Costs

Saving money through a mortgage refi is more than just... Read More

Online Home Equity Loans: A Basic Glossary

Home equity loans can be a great idea for individuals... Read More

Your Mortgage Rate Compare and Save

When trying to obtain the best mortgage rate compare offers... Read More

Zero Down Mortgage Loans - Is 100% Financing a Good Idea and Can You Get Approved?

Are you wondering if you can get approved for a... Read More

Low Income Home Loans - FHA and VA Mortgage Loans Can Help You Get Approved

If you have low income and are looking to get... Read More

Mortgage Loan Information - Know The Basics When You Refinance or Purchase a Home

If you are currently looking for a new home, chances... Read More

Hard Money Loans - Reasons Why You Might Want To Try Applying With A Subprime Mortgage Lender

Before you apply for a hard money loan, try applying... Read More

Flexible Mortgages - Offering Relief from the Fixed Mortgage

A pension mortgage may seem lucrative at the first sight.... Read More