For many people converting to a bi-weekly payment schedule is a way to pay off their mortgages at an accelerated rate. If you want to set up a bi-weekly payment schedule, your lender will divide your monthly payments in half, and set up a payment schedule for every two weeks. In the course of a year, you should have made one extra payment toward your principle.
Many online resources offer bi-weekly mortgage payment calculators. By entering some basic financial information, you can determine the amount of money you will save by converting to a bi-weekly payment plan. Most sites require you to enter the amount of the loan, the interest rate, and the term of the loan in months.
Most bi-weekly mortgage calculators provide you an overview of the amount of money you save in interest every year by paying your mortgage every two weeks. In addition, the mortgage calculator lets you know how much sooner you will own your home when you make payments every two weeks. Bi-weekly payment plans are ideal for highly organized individuals, and for those people who are able to set up automatic online mortgage payments.
Most lenders offer a few different types of bi-weekly payment plans. In some cases a lender will set up an account in your name. You send in payments to this account twice a month, and the lender makes one monthly payment. At the end of the year, the lender makes an additional, or 13th payment to your mortgage, using the excess funds in the account. You can also set up a true bi-weekly mortgage schedule with some lenders. If you’re not sure which type of payment schedule you’re on, it’s important to ask you lender to clarify the terms of your plan.