Bi-Weekly Mortgage Payment Calculator
Buying a home is always a large investment, and therefore handling the mortgage can save you money as well as shorten the period of the loan. One of option that most homeowners look at is the option of making bi-weekly mortgage payments. In this blog post, I will provide information on what is considered bi-weekly mortgage payment plan, how the bi-weekly mortgage payment calculator can be useful, and what advantages can be obtained from such approach.
What is a Bi-Weekly Mortgage Payment Plan?
Bi-weekly mortgage payment is a pay-rent plan where a homeowner pays half of his or her monthly mortgage payment, every two weeks. There is then 26 half-payments for the year or 13 full payments during one year, making it an extra monthly payment for the year. This is an extra amount of money that can help to bring down the figure of principal down faster than any regular monthly payment facility.
How Does a Bi-Weekly Mortgage Payment Plan Work?
For instance, if we draw a mortgage of $200,000 for the term of 30 years with an interest rate of 4%, then. In a standard monthly payment plan, you will pay about $955 on a monthly basis, and make twelve such payments per a year. If you were to pay bi-weekly then it means that you would pay $477 every two weeks for a total of 26 payments made in a year. 50 each year. Additional payment each year will help to bring down the principal in a shorter time meaning the total amount of interest that will be paid to the loan shark as well as the duration of the loan will be relatively low.
Benefits of Using a Bi-Weekly Mortgage Payment Calculator
A bi-weekly mortgage payment calculator is a valuable tool that can help you understand the financial impact of switching to a bi-weekly payment plan. Here’s how it can benefit you:
- Interest Savings: It is very important that, for you to save money when taking a mortgage, you can make an additional commitment to pay more money each year and save a lot of money in terms of interest.
- Shorter Loan Term: If you speed up your payments, you can actually reduce the length of the loan and send yourself to the shower of paying that mortgage off.
- Budgeting Aid: It is helpful to know the exact payment plan so that proper financial planning could be carried out and one is ready for the bi-weekly payments.
How to Use a Bi-Weekly Mortgage Payment Calculator
Using a bi-weekly mortgage payment calculator involves entering the following information:
- Loan Amount: The sum total of the deal in which a borrower receives some cash in exchange for a commitment to repay a greater sum at a later date; total amount of money borrowed.
- Interest Rate: The percentage that is charged yearly on the amount of the mortgage.
- Loan Term: The number of years that a potential borrower shall spend paying for a mortgage.
- Start Date: The date when the amount of money that is borrowed to buy the property having a lien on it for a certain amount of money must be paid back.
The calculator is used to determine the estimated value of bi weekly payments, total amount of interest to be saved and the number of years left on the loan. This makes you to view why it is beneficial to pay biweekly instead of monthly.
Potential Considerations
While the bi-weekly payment plan offers clear benefits, there are a few considerations to keep in mind:
- Lender Policies: Although there are many credit companies, it is not always easy to find the ones who offer the bi-weekly payment option. Nevertheless, it is good to determine whether this is supported by your lender or whether you have to schedule bi-weekly payments individually.
- Prepayment Penalties: Make sure your mortgage does not have any prepayment penalties if this will be the case then extra payments will not yield any good results.
- Consistency: To see the full benefit of this arrangement you need to faithfully make the bi-weekly payments.
Of course, it is possible to change the terms of the mortgage and pay bi-weekly, and it makes quite a lot of sense to do this since it helps save on interest and pay off he loan ahead of time. If you need an easy way to have an estimate of your possible savings and learn how this payment structure works then a bi-weekly mortgage payment calculator is highly recommended.