You have options when making your mortgage payment
OK, you’ve closed on your mortgage, now what? You may be thinking that your only option for payment is one single payment, in the full amount, to be made on the 1st of every month. And yes, that is one option, but it’s not your ONLY option.
Monthly Mortgage Payments
Making one monthly mortgage payment is by far the most common way that people pay their mortgage. You know the date every month, what the amount is going to be, and it makes it easier for budgeting. However, by making one single payment once a month, over the life of your loan, you may end up paying $1000’s more in interest then if you choose one of the other options available to you.
Biweekly Mortgage Payments
Most loan servicers have an option where you can set up biweekly mortgage payments with each payment representing 50% of the total monthly mortgage payment. By choosing the option, you end up making one extra full mortgage payment per year, which helps you to pay down the principal of your loan faster!
Setting Up Biweekly Mortgage Payments
If your lender allows this type of payment method, there are a few things to keep in mind when getting it set up:
- You must make one full monthly payment before this payment method can be set up
- You may end up having to make one full payment and two biweekly payments the first month of your mortgage
- There may be a fee associated with getting this set up, but if there is, it should be pretty nominal
How do I know which option is best for me?
When it comes to making your mortgage payment, there is no right or wrong solution. You must do what works best for you! If making one single monthly payment is a better option, and one that works better for your wallet, go for it. If making a payment every two weeks is more appealing and a better financial approach for your unique situation, then great! What it boils down to is that no one solution fits everyone. Talk to your loan officer, ask questions, and make the decision that will work best for you for today, and for tomorrow.