Bi-Weekly Mortgage Payments

Michael Holigan: This Mortgage Moment is for all of you out there. I don't care if you're buying you're first home, you're last home, or already live in a home. I'm going to show you how to save thousands and thousands of dollars on your mortgage just by paying it off early, but very painlessly. We're talking about bi-weekly mortgages. First off, how does it work? Well, what you do is you take your normal mortgage payment and you cut it in half. Half of your normal mortgage payment every two weeks is what you're going to pay into your mortgage company.

Let's take an example. A regular mortgage, 12 months, we pay $697 a month, times 12 equals $8,364. Now we got the $697 by a $95,000 loan amount at 8% interest. $697 times 12, $8,364 that we pay each year. Let's take a look at bi-weekly mortgages. We cut the $697 in half. We pay $348.50 every other week, or 26 times a year. That gives us $9,061 that we paid in over the whole year. What did we do? We actually paid an extra $697, the same as one payment, by the end of the year. That's the difference between $9,061, $8,364. Now that $697 is going to pay off the loan early. And that's really the advantage to this whole program is, we're going to pay off the loan early. Now you reduced it by five to seven years, depending on interest rates.

Disadvantage, and it's not a very big disadvantage, and that's that they're going to have to do direct withdrawal from your checking account in most cases. The paperwork is turning so fast with doing it every two weeks instead of once a month that they need to go in, reach into your account and take out half of that payment every two weeks. Go talk to your lender, even if you already have a mortgage, and see about bi-weekly payments. You're going to save thousands and thousands of dollars over the life of your mortgage.

Episode 012 1995 - 96 Season

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