What are the advantages of making biweekly mortgage payments?
A biweekly payment plan is a formal method of prepaying your mortgage. Under a biweekly payment schedule, you make a payment on your mortgage every two weeks instead of once a month. Each of these payments is roughly equal to one-half of a normal monthly payment. By making biweekly payments, you end up making an extra payment over the course of each year (26 half payments are equal to 13 full payments). You also pay less interest in the long term, because payments are applied to your principal balance more frequently. Ask your lender if it offers a biweekly payment schedule and if it charges a fee for this service.
Before you sign up for a biweekly payment schedule, ask your lender whether or not a penalty exists for dropping out of the program. Once you sign up for the program, you may discover that you cannot afford the extra payment or are unable to keep up with the biweekly payment schedule. If the structure of a biweekly payment plan does not work out for you, consider making monthly payments and adding a little extra whenever you can. You can also budget your money so that you are sending in one extra payment a year whenever possible.