Biweekly vs. Monthly Mortgage

Biweekly mortgages or paying additional principal get your mortgage paid off sooner.

Biweekly mortgages or paying additional principal get your mortgage paid off sooner.

You have to be proud of yourself if you have a mortgage and your biggest concern is whether you should pay it biweekly or monthly. With a biweekly mortgage, you pay every two weeks instead of once a month, which can allow you to pay off your mortgage years sooner. Every person is different, so there is no one answer that is best for everyone. But, once you understand all there is to know about the two options, you can confidently make the right decision.

Reason for a Biweekly

The main reason people consider a biweekly mortgage in the first place is to pay down the mortgage faster. By paying biweekly, you pay off your house years sooner than you would by paying a standard monthly mortgage. With a biweekly mortgage, you make 26 payments a year, which effectively comes to 13 monthly payments instead of the usual 12.

The Invitation

It’s rare for people to set up a biweekly mortgage when they buy or refinance their home, and not every lender even offers this option. What usually happens is that you receive an invitation or an offer from your bank or mortgage provider to make your payments biweekly. Not only will you pay your mortgage faster, the offers usually point out, you can have your mortgage payment coincide with your paycheck if you are paid every two weeks.

Too Good To Be True

The ads make the biweekly payment plan sound enticing, but these plans are usually going to cost you. Some charge you an enrollment fee plus a small servicing fee with each biweekly payment. Others don’t charge an enrollment fee, but instead charge a higher transaction fee with every biweekly payment. Consumer activist Clark Howard does not go so far as to say this is a scam, but he does consider this a rip-off.

Another Option

If you want to pay your mortgage off sooner, you can do this yourself for free. You simply make your regular monthly mortgage payment but add one-twelfth extra in the additional principal box. This accomplishes the exact same thing as setting up a biweekly plan that costs you money.

To Pay or Not To Pay

Before you set up a biweekly plan or pay additional principal, consider whether paying your mortgage faster is something you should even do. If you are planning to stay in your home for five or six years or less, you might want to take the extra money you are contemplating using for your mortgage and invest it elsewhere. For example, you could put your money in a Roth IRA or put more in your 401k. It’s nice to own your own home, but you need to look at all your investment options before making your decision, as Chris Farrell of the “Sound Money” radio show told Bankrate.com.

About the Author

Laura Agadoni has been writing professionally since 1983. Her feature stories on area businesses, human interest and health and fitness appear in her local newspaper. She has also written and edited for a grassroots outreach effort and has been published in "Clean Eating" magazine and in "Dimensions" magazine, a CUNA Mutual publication. Agadoni has a Bachelor of Arts in communications from California State University-Fullerton.

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