Save thousands of dollars…. and it’s free to do

This can be done at any time during your mortgage loan….but the earlier, the better.

Open a checking account, specifically for your mortgage.  Have a beginning balance of 2 months equal to your mortgage payment.  Then call your mortgage lender and tell them you want to change from a monthly payment plan to a bi-weekly payment plan.

Grab a pen and paper, now divide the amount of your mortgage by 12 and round up the figure. Each month, continue depositing your mortgage payment into the checking account, plus the rounded up figure and as the bi-weekly payments are withdrawn, you’ll notice that each 14 days the lender will withdraw 1/2 of the mortgage payment.  In 1 month, a full payment is made, but in 2 half payments.

Twice each year, usually Spring and Fall, an extra half payment is made (in those 2 months, a third 1/2 payment is withdrawn)…this makes payment numbers 25 and 26.  These 2 half payments go directly to your principle. This is why it is imperative to have that extra cushion of 2 months to start the process, as well as the extra ’rounded up’ figure each month in the account, making sure you’re not short of the extra payment amount in your account.

Example: You have a 30 year mortgage.  Each year (12) months, there are 12 payments.

There are 52 weeks in a year.

But, with a bi-weekly payment plan (every 14 days), in those same 12 months there are 26 payments (52 weeks divided by 2 equals 26).  That extra 1/2 payment and 1/2 payment going directly to the principle, over a 30 year mortgage, saves 2 1/2 years of payments making that same mortgage loan a 27 1/2 year mortgage.

But the real savings is the interest you save over the years…… Thousands of dollars saved!  And all it takes is a phone call to set it up.

The important thing is to have that cushion in the beginning, as well as the ’rounded up’ figure in the account.  It insures the money is in the account when the lender withdraws it. A good idea is to have a year at a glance calendar….. once the by-weekly is set up, circle the first bi-weekly payment on the calendar, and follow through the year circling each date at 2 week intervals.  You will see the two months where that third 1/2 payment comes up.  It’s easy.