Once you\u2019re approved for your loan, you\u2019re going to need to consider how you\u2019re going to set up payments. Most people think that a monthly mortgage payment is their only option, but that\u2019s not necessarily the case! In this article, we\u2019re going to cover everything you need to know about:<\/p>\n\n\n\n
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- Monthly vs. bi-weekly mortgage payments\u2014what\u2019s the difference?<\/li>\n\n\n\n
- Are there benefits to going with a bi-weekly payment plan?<\/li>\n\n\n\n
- What about disadvantages?<\/li>\n<\/ul>\n\n\n\n
Monthly mortgage payments<\/h2>\n\n\n\n
The most common type of mortgage payment<\/h3>\n\n\n\n
Most homeowners opt to go with a monthly mortgage payment. Image courtesy of Ooba<\/a>.<\/figcaption><\/figure>\n\n\n\n When you purchase a house, you do so with the assistance of a loan you take out with a lender and agree to pay back. Typically, those loans are paid back monthly<\/a> as your mortgage payment. Over the lifetime of your loan, you\u2019ll pay back the principal (the amount you borrowed) plus interest. The amount you pay each month will depend on the type of loan you have, how many years you agreed to, and what the interest charge is. At the beginning of your loan, you\u2019ll primarily be paying back interest, but as the years go on, you\u2019ll start to chip away at the principal as well.<\/p>\n\n\n\n
Monthly mortgage payments are a popular option because they are consistently the same each month, which makes budgeting for the month very easy. You can even sign up for automatic withdrawals so you don\u2019t have to worry about setting payments up. Many homeowners choose to go this route, but you may end up paying more over the course of your loan.<\/p>\n\n\n\n
Benefits of sticking to a monthly mortgage payment<\/h3>\n\n\n\n
Monthly mortgage payments are how many people choose to repay their loan because of their benefits:<\/p>\n\n\n\n
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- Easy to set up automatic payments<\/li>\n\n\n\n
- You can build credit while paying your mortgage each month<\/li>\n\n\n\n
- You can still make payments in addition to your monthly mortgage<\/li>\n<\/ul>\n\n\n\n
With monthly mortgage payments, you\u2019ll be making 12 payments each year (unless you choose to make additional payments), which means you may end up paying more in interest over the course of your loan. However, there may be another way to continue paying your mortgage, pay less on interest, and pay off your loan sooner.<\/p>\n\n\n\n
Bi-weekly mortgage payments\u2014how do they work?<\/h2>\n\n\n\n
Should you consider bi-weekly mortgage payments?<\/h3>\n\n\n\n
Could signing up for a bi-weekly mortgage payment be right for you? Image courtesy of Oregon Live<\/a>. <\/figcaption><\/figure>\n\n\n\n
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![Oregon Live<\/a>. <\/figcaption><\/figure>\n\n\n\nAn alternative to monthly mortgage payments are bi-weekly mortgage payments<\/a>, which allows you to split your mortgage payment in half and pay it in two installments. Instead of making your payments based on months, you\u2019ll divide up your mortgage payment by weeks. This may be a good move for you if you want to make an extra payment each year that starts to drive down your principal amount. Let\u2019s say you have a $1,200 mortgage payment and decide to enroll in bi-weekly payments, your new mortgage payment will be $600 every two weeks.\u00a0<\/p>\n\n\n\nSince there are 52 weeks in a year, this means that you\u2019ll be paying $15,600 each year to your mortgage loan amount. If you went with the monthly payment plan, you would only be paying $14,400 towards your loan each year. The extra $1,200 you\u2019re paying on the bi-weekly plan is going towards your principal, which will help you pay your loan off faster. Not only are you contributing more each year to pay back your loan, you\u2019re going to end up paying less in interest as well.<\/p>\n\n\n\nThose extra payments add up over the years, and if you consistently continue to pay on a bi-weekly basis, you may even have your loan paid off in full sooner. Wouldn\u2019t that be a great feeling!<\/p>\n\n\n\nAre there benefits to switching to bi-weekly mortgage payments? What about disadvantages?<\/h3>\n\n\n\nBi-weekly mortgage payments may seem like a great idea, but it\u2019s best to make sure you do your research to ensure it\u2019s best for your situation. You\u2019ll want to discuss it with your lender to make sure they permit bi-weekly payments, as not all lenders do. Some lenders may charge a fee for this service, or have a prepayment penalty in your contract that will penalize you should you pay off your mortgage early. Either of these may offset any benefits you get from signing up for a bi-weekly mortgage payments. <\/p>\n\n\n\nIf you find that your lender does not offer this option, you should also beware of third party processing firms that offer this service for a fee. If you\u2019re paying to have a bi-weekly repayment plan either through your lender or another company, it may not be worth your while after all.<\/p>\n\n\n\nBut if your lender does offer this program, there are many benefits to setting up a bi-weekly repayment system<\/a> including:<\/p>\n\n\n\n\nShortening the term of your loan<\/li>\n\n\n\nPaying less interest in the long run<\/li>\n\n\n\nContinue to build your equity faster<\/li>\n\n\n\nKeep building your credit<\/li>\n<\/ul>\n\n\n\nBi-weekly mortgage payments are a great way to make extra payments and may even shorten the amount of time you\u2019re paying back your loan. However, if there are fees involved, they could negate any of the potential savings you may experience. <\/p>\n\n\n\nWant to set up your own way to contribute more towards your loan that doesn\u2019t involve your lender or another company? You can! Just divide your monthly mortgage payment by 12, and set that amount of money aside each month. At the end of the year, you\u2019ll have saved the equivalent of an extra mortgage payment, which you can send to your lender instructing them to put it towards your principal.<\/p>\n\n\n\nBi-weekly mortgage payments may be a good option if your lender allows it and does not charge a fee. Otherwise, monthly mortgage payments are still a stable way to pay back your loan. Don\u2019t forget you can always put aside a portion of money and make an additional payment at the end of year to put towards your principal!<\/p>\n","protected":false},"excerpt":{"rendered":"Let\u2019s delve deeper into how these types of mortgage payments work and what the benefits are of each\u2026<\/div>","protected":false},"author":5,"featured_media":247,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"footnotes":""},"categories":[31,4],"tags":[],"class_list":["post-246","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mortgage","category-personal-finance"],"jetpack_featured_media_url":"\/wp-content\/uploads\/Blog-13.jpg","_links":{"self":[{"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/posts\/246","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/comments?post=246"}],"version-history":[{"count":2,"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/posts\/246\/revisions"}],"predecessor-version":[{"id":376,"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/posts\/246\/revisions\/376"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/media\/247"}],"wp:attachment":[{"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/media?parent=246"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/categories?post=246"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/wp-json\/wp\/v2\/tags?post=246"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"https:\/\/www.oregonlive.com\/resizer\/vTuHTxOuwUfkD6OcAxxkdJt9aPA=\/1280x0\/smart\/arc-anglerfish-arc2-prod-advancelocal.s3.amazonaws.com\/public\/ZIKBBUQ3MFDFPDLBEII672CDEI.JPG\"){kind=link}