What Advantages Does a Biweekly Mortgage Offer?

One of the most precious assets that you are likely to possess as you progress through life is your home. Owning their own homes is something that most Americans strive for.

Unfortunately, for the vast majority of people, one of the major drawbacks in owning a home is the long-term mortgage that must be paid off. Mortgages often stretch out 30 years with interest and principal repayments.

Most mortgage repayments are made on a monthly basis. However, arranging to make payments biweekly can have a dramatic effect on the amount of money you have to pay and the time frame before it is all paid off.

Under a biweekly mortgage, instead of making the payments once a month, you make half the payment every two weeks. If your mortgage is $1,000 per month, under a biweekly system it would be $500 every two weeks.

You make 26 payments per year, which is the equivalent of 13 monthly payments rather than 12. The extra payment should be taken directly off the principal, reducing the payment schedule accordingly.

The effect of biweekly mortgage payments can be dramatic. For example, if you currently have a $150,000 loan at 8 percent fixed interest, you will have paid approximately $396,233 at the end of 30 years.

However, if you use a biweekly payment system, you will pay $331,859 and have it completely paid off in 21.6 years. You save $64,374 and pay the loan off 8.4 years earlier!

The savings you realize using a biweekly payment schedule can save you nearly half of what it cost to buy the house in the first place.

An increasing number of mortgage companies are now offering a biweekly payment option. It is even possible to convert your current monthly payments into a biweekly schedule.

Some companies will attempt to charge you to refinance the loan. However, this is not always the case and shopping around can save you money in refinancing charges.

Be wary of independent companies offering to do this for you for a fee — you can do it for yourself for free.

You should receive professional financial advice when considering switching to a biweekly mortgage payment schedule.

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2012 Emerald Connect, Inc. 
New Century Financial Group
118 Wall Street • Princeton, NJ • 08540
Phone: (609) 924-2049 • Fax: (609) 924-0649
• roring@ncfg.com

 

New Century Financial Group, LLC ("NCFG") is a registered investment adviser with it’s principal place of business in the State of New Jersey. NCFG and its representatives are in compliance with the current registration requirements imposed upon registered investment advisers by those states in which NCFG maintains clients. NCFG may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. This website is limited to the dissemination of general information pertaining to its investment advisery/management services. Any subsequent, direct communication by NCFG with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of NCFG, please contact the U.S. Securities Exchange Commission www.adviserinfo.sec.gov.

Securities offered through Royal Alliance Associates, Inc., member FINRA/SIPC. Advisory services offered through New Century Financial Group, LLC a registered investment advisor not affiliated with Royal Alliance Associates, Inc.

This communication is strictly intended for individuals residing in all 50 States. No offers may be made or accepted from any resident outside the specific state(s) referenced. IMPORTANT CONSUMER INFORMATION A Broker/dealer, investment adviser, BD agent, or IA rep may only transact business in a state if first registered, or is excluded or exempt from state broker/dealer, investment adviser, BD agent, or IA registration requirements as appropriate. Follow-up, individualized responses to persons in a sate by such a firm or individual that involve either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without first complying with appropriate registration requirements, or an applicable exemption or exclusion. For information concerning the licensing status or disciplinary history of a broker/dealer, investment, adviser, BD agent, or IA rep, a consumer should contact his or her state securities law administrator. 

For additional information about NCFG, including fees and services, send for our disclosure statement as set forth on Form ADV from NCFG using the contact information herein. Please read the disclosure statement carefully before you invest or send money.

SIPC / FINRA
 

PLEASE NOTE:The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. NCFG and Royal Alliance Associates, Inc., make no representation as to the completeness or accuracy of information provided at these web sites. Nor are these companies liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving NCFG’s web site and assume total responsibility and risk for your use of the web sites you are linking to.