More frequent mortgage payments will slightly lower your term and lifetime mortgage cost.Most people choose to synchronize their mortgage payments with their monthly or bi-weekly paycheck.While it will depend on your specific situation, here are some general guidelines: Accelerated payments can shave years off of your amortization, and can save you thousands of dollars.
The real difference is when you choose accelerated weekly payments. You'll just pay a smaller amount with a weekly payment, but you'll be making more frequent payments.
That's because the total amount paid per year is the exact same for both payment frequencies. There isn't a large difference between paying your mortgage weekly or monthly, if we're looking at non-accelerated weekly payments. To find your accelerated weekly payment amount, you'll divide a monthly mortgage payment by four. The same calculation is used for accelerated weekly payments. This pays off your mortgage faster, and shortens your amortization period. By not adjusting for the extra monthly payment by taking the total annual amount of a monthly payment frequency, an accelerated bi-weekly frequency gives you an extra monthly payment every year. Note that there are 12 monthly payments in a year, but bi-weekly payments are equivalent to 13 monthly payments. To find your accelerated bi-weekly payment amount, you'll divide the monthly mortgage payment by two. The part that makes it accelerated is that instead of calculating how much an equivalent monthly mortgage payment would add up to in a year, and then simply dividing it by 26 bi-weekly payments, accelerated bi-weekly payments does the opposite. With accelerated bi-weekly payments, you'll still make a payment every 14 days (two weeks), which adds up to 26 bi-weekly payments in a year. How Accelerated Mortgage Payments WorkĪccelerated mortgage payments are the payment frequency options that will allow you to pay off your mortgage faster and save you potentially thousands in mortgage interest costs. A weekly payment is made every 7 days, and it being non-accelerated means that you will still be paying the equivalent amount of a monthly mortgage payment, just over smaller individual payments. To calculate it, you'll also multiply the monthly mortgage payment by 12 to get the amount that you'll need to pay per year, and then divide it by 52 weeks. The same thing happens with non-accelerated weekly mortgage payments. You’ll simply be paying it over two extra payments, which means each non-accelerated bi-weekly payment is smaller. You’ll still be paying the same total amount every year as you would with a monthly mortgage payment. For non-accelerated bi-weekly, you would calculate the payment by taking the monthly mortgage payment, multiplying it by 12 to get the amount to be paid every year, and then simply dividing it by 26 bi-weekly payments. Non-accelerated bi-weekly and weekly mortgage payments are based on what a monthly mortgage payment would have been. Accelerated Mortgage PaymentsĪccelerated bi-weekly and accelerated weekly mortgage payments also gives you the equivalent of an extra monthly mortgage payment every year, but it’s different from non-accelerated bi-weekly and weekly payments in that the mortgage payment amount is not reduced. Over a year, this means that you’ll be making 26 bi-weekly mortgage payments, to account for there being 52 weeks in a year.īi-weekly mortgage payments have two extra payments every year, equivalent to one month of mortgage payments, over the amount of payments for a monthly or semi-monthly mortgage payment. While two bi-weekly payments will be made for 28 days, a month has either 30 days or 31 days, except for February. Instead, bi-weekly mortgage payments are made every two weeks, which is considered to be every 14 days. You’ll simply divide a regular monthly mortgage payment into two.īi-weekly payments do not split months into two. With 12 months in a year, you'll be making 24 semi-monthly mortgage payments every year. Semi-monthly mortgage payments split every month into two. For example, you might make a payment on the 1st of the month, and another payment on the 15th of the month. With a semi-monthly mortgage payment, your mortgage payment will be made two times per month. Semi-monthly mortgage payments are not the same as bi-weekly mortgage payments. = 26 bi-weekly payments in a year Mortgage Payment Frequency and Payments Per Year Payment FrequencyĪre semi-monthly mortgage payments the same as bi-weekly mortgage payments?
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