WHAT'S THE BEST PAYMENT TYPE
What's the best payment type?
You may be wondering about which payment type is the best. Is it Bi-Weekly? Monthly? Weekly? Accelerated?
Typically, most mortgages are set up to pay monthly. That would be 12 payments per year.
Bi-weekly vs. Monthly payment?
We take your 12 payments over the course of the year, so one monthly payment x 12, and we divide that by 26 (26 bi-weekly payments.)
Do you pay off your mortgage faster with bi-weekly payments?
There’s a yes and a no answer to that. Some lenders do what’s called an accelerated bi-weekly payment. That is where we take the 50% of your monthly payment and then we times that by 26. You end up paying the equivalent to one additional months payment towards the principal loan, therefore reducing your loan amount.
If you were paying off your mortgage and you went from monthly to accelerated bi-weekly, and it was going to take 25 years to pay off, this would knock off approximately 2 1/2 years from your mortgage.
There’s other types of payments; weekly, semi-monthly, and so forth. The most common way, to make it very easy to reduce your interest is that accelerated option. However, when you’re picking a payment type, make sure to pick a payment that matches and fits your budget in your specific situation.
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