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Question: Can you cut years off your mortgage by paying 2 half-payments a month instead of 1 full payment?

(Posted by: Mike F on 2010-09-06 17:34:23)

I know this is true, but do you have to have your mortgage set up a certain way? Also, if i make a mortgage payment after the deadline, but before the end of the grace period, am i being charged more interest than if i paid by the due date? I should mention that i have a 30 year fixed rate mortgage

Posted by: Simpson G on 2010-09-06, 17:43:50

Actually, you are incorrect. You can cut time off your mortagage by making payments every 2 weeks instead of monthly. Every 2 weeks is different than twice a month. With every 2 weeks, you make 26 payments a year, which is 13 months of "monhtly " payments. By paying an extra month each year, you can shave off 6-8 years from your mortgage. I agree that if you are already set up in a 30 year mortgage, you should work on making an extra principle payment instead of just splitting up payments, assuming you do not have a prepayment penalty. It tends to work out better with the interest. You can do the bi-weekly payments two different ways. 1. You set up a mortgage that has a bi-weekly payment schedule 2. You do it on your own. HOWEVER, if you are caught up through September, you cannot decide to make a half payment for October. You would need to send your October half payment now and the other one by your due date. Whether or not you get charged more interest on late payments will depend on when the interest compounds.

Posted by: Iffy on 2010-09-06, 17:36:14

No. You can cut years off by just adding an extra 100 toward principle each month. Yes miss the due date and you incur more interest

Posted by: nascar88gyrl on 2010-09-06, 17:37:13

Make one additional payment toward your principal each year, and you can cut a 30 year mortgage to a little over 23 years.

Posted by: OldJimmy on 2010-09-06, 17:39:41

If you pay after the due date but before the grace date, you do not pay more in interest. Making bi-monthly payments (2 half-payments a month as you state) is no different than making a single monthly payment. Making bi-weekly payments (every two weeks) makes an extra month's payment each year, which will reduce the amount you pay in interest and shorten the term of your loan. You do not need to subscribe to a service to do this, if you are diligent enough to make the extra payments on your own. I'd just double up on a payment near the end of the year, before the lender does their escrow analysis and revises your payments.

Posted by: tro on 2010-09-06, 17:52:02

It really messes up the accounting with the mortgage company my daughter is always several months ahead of her payment schedule and the mortgage company cannot keep track of it hope you have a better mortgage company than she does

Posted by: Steven on 2010-09-07, 03:11:15

Lenders make money by offering you biweekly payment plans. While it can save you roughly 7 years off of your mortgage, they charge a fee for every payment and also charge an upfront fee. You can do this on your own and not pay the fees. Make one additional payment a year and it will reduce the term by roughly 7 years. Make 2 additional payments a year and it will reduce the term roughly 15 years on a 30 year mortgage! You are not being charge any more interest if your payment is received prior to being assessed any late charges.