Are Biweekly Mortgage Payments Worth it?

We have all seen the letters that come with our mortgage payment bill, "save tens of thousands", "save $60,000, "pay your mortgage off 5 years early". The offers are real but is it worth signing up for?

The answer is yes and no.

Basically, a biweekly mortgage payment is paying half of your monthly mortgage every two weeks. 

You are saving a ton of money over the life of a loan because you are making an one extra monthly payment every year when you pay your mortgage biweekly.  Instead of making 12 payments a year, with biweekly payments you are making 13 payments per year. Paying down your principal early is saving you a boat-load of mortgage interest payments.

Banks and mortgage companies have done an excellent job marketing biweekly mortgage payments and some charge hundreds of dollars to sign up.

Why pay for the privilege of paying your mortgage early?

You don't!

Instead of signing up for these biweekly programs you can achieve the same results by making one extra mortgage payment annually. If you don't have the money to make an extra mortgage payment at once, spread the extra payment thoughout 12 months by paying down a little extra principal each month. Banks make this process easy for you by providing an extra line on your monthly mortgage payment. Look for the line that usually is "extra principal payment".

To figure out how much money you will save over the life of a loan use an excellerated mortgage payment calculator. You will be asked the mortgage amount, interest rate you are paying, length of the mortgage and how much additional money do you want to pay monthly. You will be pleaseantly surprised how much you can save over the life of a mortgage. Calculator