FAQs about Biweekly Mortgage Payment Plans
March 15th, 2016
March 15th, 2016
If you want to pay off your mortgage early, you may think your mortgage lender’s biweekly mortgage payment plan makes a lot of sense. However, biweekly mortgage payment plans don’t really work the way they should. Therefore, here are some FAQs to help you understand more about how biweekly mortgage plans actually work.
What is a biweekly mortgage payment plan?
A biweekly mortgage payment plan is a mortgage payment schedule through your lender in which you make half of your monthly mortgage payment every other week instead of paying the full amount once a month. You actually make 13 payments a year instead of 12, which accelerates your loan’s payoff schedule.
Should I sign up for a biweekly mortgage payment plan?
In theory, a biweekly mortgage payment plan through your lender sounds good since you think you’re:
However, that’s not really what actually happens. You send in your biweekly payment and the company servicing your loan actually holds your payment until the second half of your monthly payment arrives. They only apply the money to your loan after they receive your full monthly payment. So you’re really still only making one payment a month – not two.
Therefore, you may think you’re saving money on interest, but you’re actually not. Additionally, the loan servicing company may actually be costing you money since they often charge fees to handle your mortgage payments.
How can I pay off my mortgage early?
First, you’ll want to check the terms of your mortgage to make sure you won’t get hit with a prepayment penalty if you pay extra or early. Then you can make extra payments to your mortgage at any time in a variety of ways.
However, make sure your extra payments are applied to your loan principal and not just the interest.
Hopefully, these FAQs have answered your questions about biweekly mortgage payment plans. If you still have questions, please call the mortgage specialists at Grandview Lending in Indianapolis. They can answer all your questions about mortgages and the mortgage process. Plus they can help you find the right mortgage loan for your needs.
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