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Save with your own biweekly mortgage system
By Justin Hunter

Everyone likes to save money, although some people are too lazy to do so. No one is going to walk up to your door, knock three times and hand over a burlap sack with the $ sign on it and say have a nice day. Well, at least not in America. Saving money generally takes a little time, efferent and knowledge.

When it comes to paying a mortgage, saving money is a borrower’s primary motive. You try to get the lowest rates for the best terms. Once you are finished paying the mortgage, you will have spent hundreds of thousands of dollars, so of course you want to save as much as possible.

One popular option is the biweekly mortgage that will allow you to pay off your mortgage earlier with the prospective of saving a few dollars as well.
Jeanette Fisher’s article, “Biweekly Mortgages: Read the Fine Print,” posted on sideroad.com, explains how it may be more beneficial to you to do your own biweekly mortgage plan without having it set up through your lender.
“You may have heard people, especially mortgage lenders, extolling the virtues of biweekly payments, saying that you can save thousands of dollars and take 5 to 7 years off your mortgage -- and then offering to set up a biweekly plan for you for as little as $400.”

The basis of the biweekly payments is that you indeed pay your mortgage once every two weeks instead of once a month. In doing this, you end up making an extra monthly payment (two biweekly payments) each year. Can’t do the math? There are 52 weeks in a year that would translate to 26 biweekly payment, or 13 monthly payments with a 12 month span. This ultimately results in saving you years and thousands of dollars on your loan because you will not be paying interest as long.

But you don’t have to spend $400 to begin saving time and money on your mortgage. You don’t have to spend anything at all if you do not want to. Why do people feel obligated to signing a contract with a lender that stipulates you are going to pay extra money?

“The key is to look carefully at the fine print in many biweekly plans. You find that even though you'd be making biweekly payments, the lender may only post them to your account on a monthly basis, which means that you wouldn't be saving anything on interest, because mortgage interest is paid in arrears (as opposed to rent payments, which are paid in advance).”

Your actual saving would result from paying off an additional month each calendar year. This is a great thing but you do not have to pay a stranger $400 and possible monthly maintenance fees to accomplish the same results.

So how can you implement the same money-saving idea on your own?
“If you get paid every two weeks, divide your monthly principal and interest payment in half and then send your lender a check for that amount during those months in which you receive three paychecks.” Those two extra checks would result in the extra month’s payment.

However if you arte not comfortable sending lump checks, you can still achieve the same results by dividing your monthly principal and interest payment by 12 and then adding that extra amount to your payment every month. This shouldn’t put too much strain on your budget.

So, you can easily save money on your mortgage no matter what terms and rates you signed for, without having to pay a lender an additional fee. You just have to be proactive and make sure you do it.

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