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Nationwide Biweekly Administration Suggests Paying Off Your Mortgage With Bi-weekly Payments
While owning a home is a dream for most people, is can be stressful having a mortgage. Most borrowers have a 30 
year mortgage, which when you think about it is a really long time to wait to pay off your home and be free of the monthly payments. Most people don’t realize that there is a simple method borrowers can use to cut between five and eight years off their mortgage. Rather than paying your mortgage monthly, you can make bi-weekly payments (BWP’s) that will enable you to pay off your mortgage early and save yourself money in the process. Why doesn’t everyone do this? Most banks don’t offer programs that allow this. Third-parties, like Nationwide Biweekly Administration, have stepped in to fill the void and offer the programs that can make it happen.
The first thing you need to understand about how this works is that it is a simple math problem. Let’s assume that you are a typical borrower with a 30-year mortgage who makes 12 monthly payments each year. Now let’s look at what happens when you decide to make a payment every two weeks (bi-weekly) instead. Since there are fifty-two weeks to a year, you end up making twenty-six payments every year. You’ll notice that this is slightly different than just doubling the number of monthly payments (twenty-four). That means that at the end of the year, you have made two extra payments, which is roughly equivalent to making a thirteenth monthly payment. These two extra payments work to drive down the principal on your loan.
The long-term affects on your mortgage can be pretty substantial. Let’s use some round numbers and do the actual math. Let’s say that you have a 30-year, $100,000 mortgage at 5%. Over the lifetime of the loan (30 years) you will be re-paying principal and interest in the amount of $193,255. If instead you made BWP’s, you would be re-paying principal and interest in the amount of $176,077. That’s a reduction in interest of $17,178, which equates to real savings. In addition, by making bi-weekly payments you will have repaid your entire mortgage in a little over 25 years instead of 30!
You can see why banks and other lenders are not always as excited about this program as the borrowers are. There are a few things to keep in mind if you want to pursue a bi-weekly payment program. First, check to verity that there aren’t any penalties or fees for paying-off your mortgage early. Some lenders do charge them. Most lenders should accommodate BWP’s, but others may not. You also need to verify with the lender that they can, and will, properly apply the bi-weekly payments to your account. If you don’t verify this before you change your payment plans, you may find yourself simply making the extra payments for no gain. Depending on the lending institution, payments may not be applied directly to the principal when they are made. Or, the first bi-weekly payment could be processed as the first installment of your monthly payment and not immediately credited. A reputable third-party such as Nationwide Biweekly Administration can help guide you through this process and get you on your way to earlier home ownership.