Advantage of paying my mortgage bimonthly instead of monthly

The idea is pretty simple. Instead of paying your mortgage 12 times a year, you pay half your mortgage every two weeks. Because you are, in essence, making 13 mortgage payments a year instead of 12, you save a lot of money. How much? Well, on a $200,000 mortgage for 30 years at 8% interest, you’d save $92,597 and pay off your loan about seven years sooner. There are a couple of things to note about this, if you like the idea. First, contact your lender directly to set up a schedule. (If you use a third party, you’ll end up paying fees that will reduce your savings.) Second, consider doing this yourself in a slightly different form—you’ll save even more. Instead of paying half the mortgage every two weeks, make an additional 1/12 payment as part of your monthly mortgage check.

Let’s use an example. On the same $200,000 mortgage, the principal and interest comes to $1,468 a month. One-twelfth of that works out to be $122.33. So, instead of paying $1,468 each month, write a check for $1590.33. Because more money gets to the lender slightly faster this way, you’ll save even more than with a bi-weekly mortgage. Your mortgage will be paid off seven years early if you go this route; even better, you will have saved $125,097 in interest. Either way, you end up ahead of the game.

If you want to find out how much you would save in your situation, speak to your bank or mortgage company. Just about every major bank or mortgage company has calculators that can show you have this can work in your particular case. And one more thing to note: There is absolutely no need to sign up with a company to do this for you. They charge a fee. This is a simple, money saving idea that you can accomplish on your own.