Tuesday, February 15, 2011

Great money-saving tip for home owners

Rob and I did this last year, but we never got around to posting about it. So then when I saw this recent article, I remembered and decided to finally write it here.

Bi-Weekly Payments Can Save Thousands and Shave Years Off Your Mortgage


How it works:
You just divide your regular monthly mortgage payment into two smaller payments (or just pay every two weeks for the whole year). We do one payment at the beginning of the month and one in the middle of the month. You end up saving on interest throughout the course of the year. It may not seem like much, but it really adds up over the course of the mortgage length. Also if you pay every two weeks, you typically end up paying a little extra off the principle (without noticing much) -- 26 payments total in the year rather than 24 (if you were just doing twice a month). So that ends up being an extra payment or more each year, taken right off the principle of your loan. I hope that makes sense. Plus the smaller payments are a lot easier to budget.

There you go. A great money-saving tip for the home owners out there.

4 comments:

Katie @ Domestiphobia.net February 15, 2011 at 6:05 PM  

I do this with my student loans - the interest savings compared to the year before I started doing it are phenomenal!

Mike February 16, 2011 at 8:58 AM  

I've heard that! We've thought about doing it too. It always makes me wonder, would you save more by doing it weekly? How about daily? Ok, daily would just be ridiculous :)

kristi.w. February 17, 2011 at 7:23 AM  

Hahah Mike - that would be awesome. But I doubt the bank would allow it. :\

Amanda @ Little House on the Corner February 22, 2011 at 9:19 PM  

We have been doing the bi-weekly payment thing for awhile now too! You're right, it's a great way to save money without really even noticing it. Our house payment generally coincides with the timing of my paycheck too, which is nice (I suppose).

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