Start paying your mortgage bi-weekly instead of monthly and
shave up to 5 years off of your payment period.
One easy way to pay down your mortgage faster is to write
bi-weekly checks instead of monthly ones. Pay on this twice-a-month
schedule and you'll get in an extra mortgage payment per year.
Sounds weird, but here's how it works: Of course, there are only
12 months in the year, so you would think that bi-weekly payments
would only equal 24 total payments. Because all of the months are
made up of a different number of days, when you break down the year
into 14-day increments, you actually get 26 bi-weekly time
That's why when you pay your mortgage bi-weekly rather than
monthly, you can fit in 2 extra payments or 1 extra month's
Seeing as you are probably already getting paid bi-weekly
anyway, it makes sense to just go ahead and set up your mortgage
payments according to your pay schedule. Right?
There are actually a couple of different schools of thought
First of all, if you don't already have your financial ducks in
order and have things high-rate credit card debt, you should take
care of that first.
If your other debts are stable, it makes sense to pay down your
mortgage faster, especially if there are no prepayment penalties or
fees attached. Pay an extra check every year and you could shave as
much as five years off of your thirty-year mortgage, which will
save you a lot on interest and also you peace of mind.
Some finance experts have different opinions on this, though.
The thought is that there are either better ways to prepay, or
better ways to invest that extra money (if you have it).
Instead of tying up your extra cash in mortgage payments, some
recommend that you save up the extra money and just make one extra
payment at the end of the year. This way, you'll have that cash
available for emergencies and other investments during the year.
One downside to this strategy is that the longer that you don't pay
down your mortgage, the more interest you'll be paying throughout
Some suggest that you consider whether or not that money is
better spent on higher payout investments instead of prepaying your
mortgage. If you've got a 7% mortgage then it makes sense to
refinance or prepay. If you have a 4% mortgage, though, it's likely
that you can do better things with you cash than prepay the
While there are many ways to accomplish paying your mortgage
down faster, the bi-weekly strategy is one of the
easiest-especially if you are the type of person who lacks the
discipline to use extra money to pay down your mortgage and needs
some sort of structure to make it happen.
There are also other factors to consider other than the savings.
Getting rid of your mortgage sooner has a whole emotional angle in
that it can lift the weight of a financial burden off of your
shoulders and prepare you to start thinking (if you aren't already)
about focusing all of your energy and money on things like college
tuition or retirement.