Should I Pay My Mortgage Bi-Weekly?

September 10, 2019
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There is a lot of talk out there about paying mortgages bi-weekly instead of monthly. Many feel that it better ties into their cash flow if they are paid bi-weekly instead of monthly or bi-monthly. This results in 26 payments over a year, equal to 13 months, instead of the traditional 12 months. With the extra payment, you will pay off your mortgage earlier.

For example

A $300,000 mortgage for 30 years at 4%, will result in a monthly payment of $1,432.25. If instead of paying only 12 months of payments over a year, you actually pay 13, you will shave a little over 4 years off your mortgage payoff date. If the mortgage company calculates interest more regularly, like weekly or monthly, the payoff will be even sooner using the bi-weekly method.

Another Option

Higher Monthly Payments - One of the pain points for bi-weekly payments is that many banks do not offer systematic payment options that are more regular than monthly. If that is the case, you could split the 13th month into 12 and add it to your regular monthly payment. Using the example above, if your monthly payment is $1,432.25 you could add $119.35 ($1,432.25 / 12) to your monthly payment for a total of $1551.60. If payment is made at the beginning of the month and the bank calculates interest more regularly than monthly, this will result in an earlier payoff date than the bi-weekly method.


Disclaimer: Alex Voorhees and Reston Wealth Management do not provide mortgage, legal, accounting, or tax advice. This information is not intended to be a substitute for specific individualized mortgage, legal, accounting, or tax advice. We suggest that you discuss your specific situation with a qualified mortgage, tax or legal advisor and/or licensed realtor.  The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) or strategies may be appropriate for you, consult your financial advisor prior to implementing a strategy. No strategy assures success or protects against loss. You should consider the investment objectives, risks, charges and expenses of any investment carefully before investing.