How to Calculate a Weekly Mortgage Payment

Although most homeowners pay their mortgages monthly, that is not the only way to pay down your debt. In fact, biweekly or even weekly mortgage payments can help you to pay down your mortgage faster without drastically changing your monthly budget. Before you decide on a payment plan for your home loan, learn about what goes into a mortgage, the payment options, the benefits of each choice and how to calculate payments.

The Pieces of a Mortgage Payment

When you finance your home, your lender will probably tell you the amount of your total loan amount, term and monthly payments. They may also give you plenty of paperwork detailing everything that goes into the payments. Typically, your regular payments go toward the principal, interest, estimated taxes and homeowner's insurance.

The principal is the amount it would take to pay off the loan itself with no interest. So, if you buy a house for $250,000 and put $50,000 down, your initial principal will be $200,000. Many homeowners barely make a dent in that amount for the first few years if they pay monthly.

This happens because the majority of the first years of payments go toward interest on the loan. Interest is what the lender charges you for the loan. If you have great credit, your interest rate will often be lower than home buyers with average or poor credit. Interest rates may go up and down monthly, as well.

The insurance and taxes parts of the payments go into an escrow account. The bank then pays for these expenses at the end of the year. This account may also include Private Mortgage Insurance (PMI). Some homeowners choose to exclude insurance and taxes from their mortgage payments, but they must cover these expenses on their own.

Although most people choose monthly mortgage payments, this is not the only way to pay off your home loan. Some lenders allow you to make biweekly, weekly or accelerated weekly payments. The difference is not only in how often you send money to the lender but also how you calculate the payment.

Why Choose Weekly Payments

The first reason you may want to pay your mortgage on a weekly schedule is that doing so can help your finances stay on track. Some people struggle with keeping enough money in their accounts. If you make plenty of money to cover your mortgage but you feel it burning a hole in your pocket, weekly payments could help.

Perhaps the most exciting reason to choose biweekly or accelerated weekly payments is that you can save thousands of dollars. The way that you calculate the payments means that you make the equivalent of one extra payment per year. That additional money goes directly toward the principal.

Because you reduce the principal quickly, you save money on the compounding interest. For example, if you have a $100,000 loan with a 6.5 percent interest, you could save over $30,000 on interest. All for only a little extra per month.

Calculate Weekly Payments

If you do not want to increase your total yearly payments but you do want to pay weekly, you can use a simple calculation to decide how much to send each week.

First, take your monthly payment amount and multiply it by 12. That equation gives you your yearly total. Divide that total by 52, and you have your weekly payment amount. Remember that this will not help you pay down your loan faster, but it could keep you from burning through your money before the first of the month.

Calculate Accelerated Weekly Payments

The accelerated weekly structure allows you to make as many payments while still chipping away at your principal balance. The calculation for this plan is even easier than the weekly one. Divide your monthly payment by four and that's how much you should pay each week.

The Biweekly Plan

Homeowners who get paid every two weeks may prefer the biweekly payment schedule. Instead of 52 payments per year, you make 26 of them. Using a biweekly mortgage payment calculator, multiply your monthly payment by 12, then divide that figure by 26. Send that amount to your bank every two weeks.

Using a Weekly Payment Calculator

If you want to be sure that you're making the right payments, you can use an online biweekly or weekly mortgage calculator. These easy tools help you find the precise amount to send each time.

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