Pros and Cons about Paying Your Mortgage Every Other Week vs Paying Just Once a Month<\/p>\n\n\n\n
Mortgage payments are one of the main factors to consider when purchasing a home, since you will have to make payments over time to completely repay the loan. Along with these regular payments on the loan amount, you\u2019ll also be paying off the interest of the loan. The most common types of mortgage payments are made monthly, where you will start by paying the most towards that interest. As your interest amount decreases, you will start paying more towards the loan principal<\/a>, which is the amount you had initially borrowed. <\/p>\n\n\n\n 5 most common types of mortgage loans include:<\/p>\n\n\n\n Most people who use mortgage loans make payments once a month. These payments are due on the same day every month, so you\u2019ll always be able to plan in advance and save up if need be. While monthly payments seem most reasonable and efficient, you might actually end up paying more for those 12 payments of the year. This is due to the increase of interest. <\/p>\n\n\n\n Because you know the exact date of the mortgage payment each month, you can opt for automatic mortgage payments to automatically withdraw when it is due. However, automatic payments can run you into trouble when you don\u2019t have the money in your account. This could leave you with overdraft\/penalty fees<\/a> from your bank and lender.<\/p>\n\n\n\n While monthly mortgage payments are the most common, you can also opt to make your monthly payment every two weeks instead. Instead of making 12 payments every year, you\u2019ll be making around 26 payments with a bi-weekly schedule. Some months are longer than others, so technically you\u2019re paying more with bi-weekly payments. Why is this a good thing? When you make extra payments, you\u2019re working to pay the principal down faster. Looking at the entire term of your loan, making extra payments could definitely provide some benefits down the road!<\/p>\n\n\n\n While bi-weekly mortgage payments can be a good idea to help you pay down that principal faster, there are some drawbacks that you will want to consider.<\/p>\n\n\n\n Mortgage payments can make up a pretty large amount of your total bills each month, and with a bi-weekly strategy you are paying more overall towards that payment. Putting even more money towards the mortgage can impact other goals you might have, including saving up for a retirement or a new car. <\/p>\n\n\n\n Some lenders will charge you a fee to enroll in a bi-weekly payment plan. There are payment processing companies out there that won\u2019t hesitate to charge an initial set up fee, which could be as high as $300! Many mortgages also come with a prepayment penalty<\/a>, that lenders might charge if the borrower paid off the loan before the repayment schedule had originally stated. Prepayment penalties can include a 2 to 4 percent charge of the balance\/flat fee. Make sure to look over all your documents and speak with a servicer to verify the payment plan.\u00a0<\/p>\n\n\n\n\n
Monthly Mortgage Payments <\/strong><\/h2>\n\n\n\n
Bi-Weekly Mortgage Payments <\/strong><\/h2>\n\n\n\n
Cons of Bi-Weekly Mortgage Payments <\/strong><\/h3>\n\n\n\n
Taking Away from Other Savings Goals<\/strong><\/h4>\n\n\n\n
Prepayment Penalty Fees<\/strong><\/h4>\n\n\n\n