A typical mortgage requires a holder to make a total of 12 payments in an entire year. The good news is that you know when and how much you have to pay for them so it makes it easier for you to budget. But what if you prefer to get your mortgage off your hands faster? A bi-weekly payment calculator can help yous split up your payments and achieve just that.
A Shorter Mortgage Term
This goes without saying. You can use your bi-weekly payment calculator to make your mortgage a passing memory by half the time it would take you normally. This is because once the bi-weekly payments are applied to the principle of your mortgage it can shorten the time period by an average of eight to six years.
Save up on Interest
Since you shorten the term of your loan by eight to six years through bi-weekly payments it will save you thousands of dollars in interest, interest that you would have had to pay during that time. Use your bi-weekly payment calculator to find out how much you can get in interest.
Since the lump sum of the principle loan amount will be reduced considerably the equity of your home will increase as well. This means that you would owe more of your property in 5 years than you would have if you make monthly payments. You can use your vested equity however you want. A bi-weekly payment calculator will help you decide.
Is it for you?
Just because bi-weekly payments save you money in interest and give you the chance to operate a bi-weekly payment calculator does not mean that you should go for it. Keep the following in mind before settling for such a payment plan –
How close are you to retirement? Should you go for a bi-weekly payment plan if you happen to receive your retirement fund on a monthly basis?
Would such a plan hold its own if you have other financial responsibilities that you need to see to?
Do you plan on staying in your house for long? If you are looking for a bi-weekly plan that will last its best that you plan on staying in the property for a good number of years even if the extra money you pay will come back as equity.
You can ask your lender to allow you to pay off the bi-payments without enrolling yourself in a program. However, most lenders will probably not agree to such a proposition. You will only be entitled to pay bi-weekly payments only if you are part of an accelerated mortgage program. Fortunately a bi-weekly payment calculator should make it easier for you to keep track of your finances and pay of your mortgage faster.
You can also save up more if you decide to set aside a certain portion of the total mortgage amount. This also includes the extra amount you come up with your bi-weekly payment calculator each month as well.
You need to email your financial institution to apply the extra amount to your principle in case of electronic payments.
What to Watch out for
A bi-weekly mortgage plan requires a holder to make two payments instead of one in a month. This means that you will be splitting your payments in half by paying every two weeks. Just make sure that you check with your lender first. He might not approve of the plan. If you have already established an automatic payment plan you need to ensure that you can halt the proceedings to revert to the new plan. Otherwise you might end up paying more and lose the chance to use your bi-weekly payment calculator.
Does your Lender Approve?
Some lenders will not apply the extra to the principle. Make sure that yours credits you on every half payment as soon as he receives it. You won’t see any benefits if your lender waits till he receives the second payment of the month.
Most lending institutions will convert a normal mortgage payment plan to a bi-weekly payment mortgage for a fee. This will entitle your lender to draw bi-weekly payments from your account every two weeks as well.
However, some of them only make the payment once a month. This way the extra payment will not be applied to the entire loan till the year is up. Therefore its best that you read the fine print before signing on the dotted line and using your bi-weekly payment calculator. You do not want to end up paying a fee that you cannot afford.
Don’t forget to keep the fee in mind before using a bi-weekly payment calculator . As discussed most lenders charge a hefty fee for bi-weekly payment plans. Most mortgage holders consider the extra charge to be well worth it since it allows them to get rid of their mortgages faster. A busy lifestyle cannot afford mortgage worries after all. Couple that with a handy bi-weekly payment calculator and you will have paid off your mortgage in no time.
Do not confuse a bi-weekly mortgage with a bi-monthly one. The latter requires a mortgage holder to make payments after every two months rather than weeks like a bi-weekly payment plan and will therefore work differently. It also means no extra payment.
Remember, it pays to be careful where bi-weekly mortgage plans are concerned even if you have a bi-weekly payment calculator to back you up. Make sure that you read the fine print and ask your lending institution their policy regarding weekly payments. Your mortgage worries will not be able to handle a hefty fine along with the payments. You can use your bi-weekly payment calculator to compute your figures and calculate the amount of savings that are coming your way.