September 7th, 2016 | Bi-Weekly Mortgages
It's important to remember that agreeing to bi-weekly payments with your lender is a contract. Once that contracts starts, you're
obligated to make those 13 payments per year no matter what.
If you choose to self-manage, though, you can get the same result but without the financial
obligation. For example, if it's the Holiday season and you'd like "skip a month" of extra payments, you can do it because you're
not under contract.
Sometime later, then, you can double-up your payments to get your loan back on track. It's your choice -- not the bank's.
And, if you're still not convinced that bi-weekly programs are wasteful or risky, double-check whether your lender charges a fee to participate in its 13-payments-per-year program. Some banks do, and that's money wasted.
If your bank is charging for its bi-weekly mortgage payment program, just say "no."
Bi-weekly mortgages aren't typically worth the cost or commitment. Thankfully, though, with current mortgage rates low, the best alternative to a bi-weekly mortgage plan may be to refinance into a new home loan completely.
Taking a refinance to lower rates and putting your monthly savings back into your mortgage as "extra payments" each month
accelerates your loan payoff faster than a bi-weekly program ever could.
Assuming a 100 basis point (1.00%) point drop in your mortgage rate, putting your monthly mortgage savings back into your loan
can shorten your loan's term 63% more than any bi-weekly program.
With today's mortgage rates low, a bi-weekly mortgage program may appear to be a smart way to save money on your loan. But, is it really?
Any questions? Wondering what's best for you and your family? Give us a call at (901) 388-1588!