BiWeekly Mortgage Payments Save You Money

September 30, 2011/Scott Sheldon

Getting out of debt and mortgage free seems to be on everybody’s mind with these low mortgage rates. In fact there is a lot of truth to making a biweekly mortgage payment. A Biweekly mortgage payment is in essence doubling up on your payments to pay off your house faster. Calculate your mortgage payment.

One simple way of doing it is simply making an extra principal prepayment every month.

To really maximize the effects of a biweekly mortgage payment, you need to be consistent.

Here are the two ways to effectively reduce your mortgage interest by making biweekly mortgage payment on your home loan.

1. Make an extra mortgage payment every year. Seems easy enough right? Let’s look at an example.

Looking at $225,000 loan at 4.25% on a 30 year fixed rate loan the monthly payment is $1107 per month. Making an extra payment on that mortgage loan every year would allow you to pay off the loan in 25.92 years and save $26,994 in mortgage interest.

You will shave off 4.08 years on your mortgage pay off by making 13th payment every year on your home loan.

2. If making an extra mortgage payment every year doesn’t sound very fun, you have another choice which is to make a 1/12 of your mortgage payment on top of your payment due each month.

Looking at the same example you will shave 4.25 years off your mortgage payoff and you’ll save $27,996 in interest. Let’s revisit: the mortgage payment is due is $1107 per month we simply divide that by 12 months which equates to $92.25 per month. We add the $92.25 per month to the mortgage payment is due $1107, this means you if you pay $1200 per month instead you will realize the savings.

Making a biweekly mortgage payment sounds like a great idea!

Well it is a great idea you are shaving years off your mortgage by paying slightly more than what is due each month or doing it one lump sum annually. If you can do it monthly consistently your interest savings over time is greater.

Note: your mortgage servicier (the company you are making house payments to every month) likely will not set up a biweekly mortgage payment for you through their system. Why not? It’s simple they lose.

When you start paying down your principal balance by more than what is required, banks don’t like that because they get less interest over time. Make no mistake, the bank wants to earn income off the interest you are paying them monthly, annually over the term of the loan. They want you to have the loan for the full term, 360 months.

Biweekly mortgage payments allow you to save thousand dollars of interest over time.

Yes, it’s true as long as you consistently make that extra 13th payment per year or make an extra monthly principal prepayment you’re in the clear.

Here’s some homework for you find your principal and interest payment on your mortgage statement.

Divide that payment by 12 which represents 12 months a year and take that 1/12 payment and start making it every month when you make your mortgage payment.

Curious about biweekly mortgage payments? Get a free mortgage rate quote.

Call Scott Sheldon Santa Rosa Mortgage Lender and he can walk you through the steps and show you the interest saved. Scott has over six years of mortgage experience and can show you how to chip away at that mortgage. Learn how biweekly mortgage payments can save you money.

 

 

 

 

 

 

 

 

 

 

 

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RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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1 Comments

  1. How do I make a bi-weekly mortgage payment if my lender won’t bill me that way? - Sonoma County Mortgages | Free Mortgage Quotes | Loans on May 15, 2014 at 2:50 pm

    […] Make a 13th payment… […]



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