One of the major decisions home buyers have to make is where to get financing to buy a home. Home buying can be an expensive undertaking; it is advisable to work with the best experts and partners in the industry. While there are many financial lenders, only the best will offer you products that meet your needs. A bi-weekly mortgage is a great option to consider when looking for financing.
What is a Bi-Weekly Mortgage?
Under standard mortgages, the lender will require that borrowers make monthly payments over a set number of years. Bi-weekly mortgages allow borrowers to make payments every two weeks rather than monthly. The money paid every month remains the same since each bi-weekly payment is exactly half of the equivalent single monthly payment under a standard mortgage.
What Does it Mean?
The explanation behind this type of mortgage structure is quite simple. Since a year has a total of 52 weeks, making bi-weekly payments will see a borrower paying a total of 26 payments in a year. In case you opt to make two payments every month, you will pay a total of 24 payments for the 12 months of the year. With a bi-weekly mortgage, you will have made two extra payments, which are equivalent to one monthly installment. In essence, the one extra month worth of payment will be directed towards reducing the principal amount.
Benefits of Bi-Weekly Payments
There are several reasons why you may want to apply for a bi-weekly payment plan when looking for financing for a home.
Making a total of 26 payments in a year translates to an equivalent 13 monthly payments. Since the extra month worth of payment goes towards reducing the principal amount, you will end up clearing your mortgage faster and therefore paying less interest over the life of your loan. Bi-weekly payments can also be more flexible if your pay period is also bi-weekly. The smaller payments may be budget-friendly, helping you to pay your mortgage payment on a payment schedule that may work best for you.
For more information about bi-weekly mortgages, book an appointment to speak with a qualified lender at a time most convenient for you!