Can I Pay My Mortgage Twice a Month?

Most homeowners make a single mortgage payment each month. However, paying twice a month is an alternative approach that can influence the loan’s overall cost and duration. Understanding these payment schedules is important for homeowners considering adjustments to their financial commitments.

Understanding Bi-weekly Mortgage Payments

A bi-weekly mortgage payment plan involves submitting half of your regular monthly payment every two weeks. This differs from a standard monthly schedule of one full payment per month. Since there are 52 weeks in a year, this frequency results in 26 half-payments annually. These 26 half-payments effectively add up to 13 full monthly payments over the year, rather than the traditional 12. This means an additional full payment is directed towards the mortgage each year. Many lenders may offer this option, or it might be facilitated through third-party payment processors.

How Bi-weekly Payments Affect Your Mortgage

The impact of bi-weekly payments stems from the equivalent of an extra full monthly payment being made each year. This additional payment is applied directly to the loan’s principal balance. By reducing the principal more quickly, the amount of interest that accrues over the loan’s life also decreases. This accelerated reduction leads to a shorter loan term. For instance, a 30-year mortgage could be paid off several years earlier, potentially shaving off 4 to 8 years from the original term. The consistent principal reduction results in less total interest paid over the life of the mortgage.

Arranging Bi-weekly Mortgage Payments

To arrange bi-weekly mortgage payments, homeowners should first contact their current mortgage lender or servicer to confirm if they offer a direct program. If not, third-party services might facilitate this, though they could involve additional fees. Inquire about any associated costs, as some may charge a setup fee or a small transactional fee per payment. Verify that any extra payments made will be applied directly to the loan’s principal balance. Also, confirm if your loan agreement includes any prepayment penalties, which are uncommon but can apply if the loan is paid off significantly ahead of schedule.

Other Mortgage Payment Approaches

Beyond bi-weekly payments, homeowners have other methods to accelerate their mortgage payoff. One approach is to make additional principal payments whenever possible. This can involve rounding up the monthly payment to the nearest hundred dollars or adding a specific extra amount each month. Another strategy is to make one extra principal payment annually. This can be achieved by dividing your monthly payment by twelve and adding that amount to each regular monthly payment, or by making a lump sum payment once a year. Applying financial windfalls, such as tax refunds, work bonuses, or other unexpected income, directly to the mortgage principal can also significantly reduce the loan term and total interest paid.