Saving Money on the Mortgage

The original title of this blog post was going to be about making "biweekly" or "bimonthly" mortgage payments, but since there seems to be confusion about which term is correct, I thought I'd go for something a bit simpler. Moving right along...

Paying the mortgage every month is always a stressful time around our household. Mainly because we are always trying to figure out whether we have enough money to put more down on the principle, so we can gradually shave off some of that lovely interest. However, a great money saving blog called The Simple Dollar offers a different solution that I took a liking to.

While it's fairly common knowledge that making an extra mortgage payment per year can reap lots of long term benefits in savings (around $41,000 on a $219,000 mortgage), it's not always easy to have that kind of money around at the end of the year. So, the article writes about a different strategy that involves paying half of the mortgage every two weeks. Now, this is different than the myth of paying half the mortgage twice a month, which actually doesn't help (that turns into one full payment per month). However, paying half of the mortgage exactly every two weeks becomes 13 full payments over the course of a whole calendar year.

I'm no math wizard, so if that sounds confusing, I'd recommend checking out the article, Mortgage Half-Payments: How Much Do They Save. The writer offers a strategy built around paying half the mortgage every time you receive a paycheck. If you are paid every two weeks, that is, as opposed to twice a month (yes, there is a difference).

No matter how you slice it, though, the lesson is the same: an extra mortgage payment each year can save you a pile of money over time. Just be sure to check that your mortgage allows early payments and how they work towards the principle. And of course, you could always just pay extra (or around 10 percent of your monthly payment) towards principle each month and come up with the same result.

How many of you have tried out this kind of strategy with your mortgage to save money? Have you seen the benefits?

Source- The Simple Dollar