Directory of Biweekly Mortgage Lenders
An option you've probably heard about is paying your loan biweekly, rather than monthly. This option promises to save you interest and build equity faster -- and it will, since paying the loan every other week translates to thirteen months? worth of payments each year. Generally, a 30-year loan paid biweekly will be fully paid off in about 22 years; a 15-year term is amortized in about 12 years. Typically, one half of your monthly payment will be automatically withdrawn from your bank account every two weeks (14 days) and immediately credited toward your loan.
But be careful: not all biweekly loans are true biweeklies. There are outside services which advertise that they can turn your loan into a biweekly loan. All they do is withdraw your funds electronically every other week, and then simply send a thirteenth payment to your lender once a year -- and charge you handsomely for the privilege.
You can prepay on your own, of course; for more on that, click here. The overall effect on your loan will be about the same whether you get a bi-weekly loan or whether you prepay a standard one.
"If you're offered a third-party program,] we suggest that you investigate further, since in most cases such companies are not regulated to the same extent (if at all) as lenders. And ask yourself if it's worth the cost, since you can achieve the same results yourself by simply prepaying your loan, assuming you have the financial willpower to do so. And there are disadvantages to locking yourself into a biweekly schedule, since it lacks flexibility."-- From "How to Shop For Your Mortgage"
Want to see just how much you could save? Use our mortgage calculator to figure out the savings on a bi-weekly mortgage. Or, calculate your savings if you were to prepay your current mortgage.
Learn more about bi-weekly mortgages, how to tell a 'true' one, and learn about prepaying your existing mortgage with two articles by Marc Eisenson: I Can Save You $41,911 and Mortgage Myths Could be Costing You $25,000.