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The term “bi-weekly” means every other week. If you get paid bi-weekly, you usually get your check every other Friday. When it comes to a mortgage, typical amortization plans (payments of principal and interest) use a 30-year/360-month calculation. But many lenders offer a bi-weekly plan too.
In this case, you would make 26 payments a year. When your paycheck is also bi-weekly, this option works fantastically. When you do this, you effectively make 13 monthly payments in a year. While some lenders won’t accept two half payments mailed to them each month, they will set up automatic deductions bi-weekly for you.
Can you do it faster?
A bi-weekly plan will pay down your loan more quickly than twelve monthly payments, but can you do more to get your house paid off?
Here are some options to add to your plan and get your mortgage paid off sooner:
- Round up: If your bi-weekly payment is $762 a month, round it up to $800. That extra $38 against your principle lowers the overall interest you’ll pay. If you can round it up higher, do so.
- Use your bonus: Annual bonuses from work often go toward holiday gifts and other expenses, but if you really want to pay your house down, add it to your last payment of the year.
- Use your tax refund: If you get a refund from the government every year for overpaying your taxes, apply it to your house. A few hundred or thousand dollars extra every year makes an enormous difference in the interest you pay and how soon that property belongs to you in full.
Online calculators can help you determine what adding just a small amount to your payment can do to reduce the time it takes to fully amortize your mortgage. Plugin different numbers to see what works for you.
If you haven’t yet purchased your house, your real estate agent can get you started, so give them a call today. Then set your budget, buy your house, and put your plan into action.
About the Author
Linda Cappello, Broker, GRI, ABR
Linda A. Cappello, Owner/Broker of Cappello Realty Shoreline Properties. Cappello Realty is a full service boutique Real Estate firm that specializes in 06855 - East Norwalk, and services all of Norwalk and Fairfield County, CT. Linda has been in the Real Estate business for 20+ years, spending 18 of them as a Owner/Broker. Being a Broker adds a lot responsibility to her job. She is responsible for overseeing every transaction and agent in the office. This is a challenge that she looks forward to and takes very seriously. She is constantly taking continuing education classes and attending seminars to keep abreast of the ever changing market as well as the industry standards, rules and regulations.
She is a native to East Norwalk, and has an in-depth knowledge of the city that she loves, as well as the intricacies of the many unique neighborhoods and areas that Norwalk offers. Linda offers her clients a network of professionals ranging from Attorneys, Mortgage Brokers, Home Stagers and Home Inspectors to any and all pros that you may need for a successful transaction and for the convenience of her clients.
"My job doesn't end at the closing table. It goes far beyond that, keeping in touch and staying friends who refer their family and friends. A lot of my business is referral business which is the greatest accomplishment and honor of all. Earning my clients trust."
