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Loading...Loading...A biweekly mortgage payment is a way for borrowers to pay back their loans by making half of their monthly mortgage payment every two weeks. This adds up to 26 half-payments a year, which is the same as one extra full payment.
A biweekly mortgage payment plan changes the times and amounts of money you send to your loan servicer. You pay half of that monthly amount every two weeks instead of writing one check every month. It looks easy enough on the outside. But this is why it matters so much over time.
A year has 52 weeks. If you divide that by two, you get 26 payments every two weeks. Because each one is half of a monthly payment, those 26 payments add up to 13 full monthly payments. A regular monthly schedule only gives you 12. Every year for the life of the loan, that thirteenth payment goes directly toward lowering the principal balance.
Why is that important to you? This is because mortgage interest is based on the amount you still owe. Every dollar that comes off the principal means that you will pay less interest in the future. The sooner you start, the bigger the effect. It's like a snowball. For most people with a 30-year fixed-rate loan, changing the payment frequency by just a little bit can cut the time it takes to pay it back by four to six years and save tens of thousands of dollars.
The idea of making mortgage payments faster became popular decades ago, partly because of how mortgages work in Canada, where biweekly schedules are more common. Most conventional, FHA, and VA loans in the U.S. are set up to be paid back monthly by default. But now, more servicers let borrowers choose biweekly programs, sometimes through automated online portals.
One thing that is very important to remember. Paying every other week is not the same as paying twice a month. That schedule is every two months, which means you get 24 half-payments a year instead of 26. You don't get that extra annual payment with bimonthly, so the savings on interest are small. Check to see if your servicer really means "twice monthly" when they say "twice monthly."
Once you see the numbers, the mechanics are easy to understand. Let's look at how a biweekly schedule works in real life compared to a traditional monthly schedule.
Your servicer expects you to make one full payment by a certain date each month if you pay monthly. That payment includes interest that has built up since the last payment and a part that goes toward your principal. Most of your early payments on a standard amortization schedule go mostly toward interest. It could take years for the split to even out. AmeriSave borrowers can look at their amortization breakdown to see exactly how this change happens over time.
Now change to every other week. Every two weeks, you send half of that monthly amount. Your servicer gets paid more often, and here's the part that really helps: because you're paying off the principal more often, there's less principal sitting there earning interest between payments. You've made the same amount of money as one extra monthly payment over the course of a year without even realizing it.
But here's the part that most people miss. Not all servicers treat biweekly payments the same way. Some will actually put each half-payment toward your loan as soon as they get it. That's the best case scenario because you're getting the most out of lowering your balance every two weeks. Some people will keep each half-payment in a suspense account until they get both halves, and then they will apply the full monthly amount. If that's the case, you still get the extra payment each year, but you miss out on some of the interest savings that come from paying off your loan more often.
Before you switch, ask your servicer these two questions. First, will they accept partial payments right away? Second, are there any costs involved in setting up a biweekly plan? Some third-party companies charge fees for setting up or processing biweekly programs, which can cut into your savings.
Let's put some real numbers on this. For example, you might get a 30-year mortgage with a fixed rate of 6% on a $350,000 loan. If you have a standard monthly plan, your monthly payment for the principal and interest is about $2,098. That's just the principal and interest; it doesn't include taxes or insurance.
If you make monthly payments for 30 years, you'll end up paying about $405,360 in interest on top of the original $350,000. The total amount you owe is about $755,360.
Now do the biweekly one. Split that $2,098 monthly payment in half. You pay $1,049 every two weeks. You send that amount every two weeks, which adds up to 26 payments a year. That comes out to $27,274 a year in biweekly payments, compared to $25,176 a year in monthly payments. Your extra yearly payment is the difference of about $2,098.
You could pay off the mortgage in about 25 years instead of 30 if you made biweekly payments on the same $350,000 loan at 6%. And here's the part that really gets people interested: you'd save about $62,000 to $67,000 in interest. That is real money. A good amount of money for a college education or a full kitchen remodel. I have done a few of those myself, and I can tell you that they are not cheap.
The savings grow even larger at higher interest rates. According to Freddie Mac, the 30-year fixed mortgage rate recently averaged around 6%. If rates were at 7%, that same borrower switching to biweekly could save upward of $80,000 in interest. At lower rates like 4%, the savings shrink to maybe $30,000 to $35,000. Still not nothing, but the higher the rate, the more biweekly payments work in your favor.
Not everyone should make payments every two weeks. They're a tool, and like any tool, they work best in some situations. This is how to tell if it fits.
If you get paid every two weeks, a biweekly mortgage schedule will fit in with your paychecks. You can set up automatic drafts to take money out of your checking account on payday, and you won't even notice the difference. Because of that built-in rhythm, it's easier to budget because you're not trying to make one big payment with one paycheck.
It also makes sense if you plan to live in your home for a long time. The savings from making payments every other week build up over time, so people who sell their homes after three or four years won't get nearly as much benefit as people who keep their loans for ten years or more. This plan rewards your patience if you've found a home you love and don't plan to move any time soon.
People who own homes and want to build equity faster should also think about making biweekly payments. If you pay off your loan faster, you will own more of your home. If you ever want to use your home's equity to get a home equity loan or line of credit, or if you're trying to get rid of private mortgage insurance, that matters. AmeriSave can explain how faster equity growth fits into your overall financial picture.
There are situations where putting extra money toward your mortgage isn't the smartest play. If you're carrying high-interest credit card debt or student loans, the math often favors paying those down first. A credit card at 22% costs you far more per dollar than a mortgage at 6%. Tackle the expensive stuff before accelerating the cheaper debt.
If your budget is already tight, committing to biweekly payments adds pressure. Remember, two months each year will have three biweekly payments due instead of two. That third payment can catch you off guard if cash flow is uneven. My colleague mentioned something the other day that stuck with me. She said a lot of people set up biweekly plans with the best intentions, then get surprised by those three-payment months and end up scrambling.
Also check whether your loan carries a prepayment penalty. The Consumer Financial Protection Bureau notes that prepayment penalties on most residential mortgages are prohibited under the Ability-to-Repay rule. But if your loan predates that rule or falls into an exception category, paying extra could trigger a fee that wipes out your savings. Always verify with your servicer first.
And if your servicer charges fees to set up or maintain a biweekly program, do the math. Some third-party services charge $300 to $400 in setup fees plus a per-transaction charge. If those fees total more than the interest you'd save in the first few years, it's not worth it.
Most people think that starting biweekly payments is harder than it really is. The first thing you need to do is get in touch with your loan servicer. A lot of servicers now let you make payments every other week right on their website. You might be able to switch by logging in, picking the biweekly schedule, and selecting the bank account you want to use for automatic drafts. AmeriSave's online tools make it easy to look at your payment options and see how different schedules will change your loan.
When you call or log in, ask these three questions. Does the servicer use each half-payment right away or keep it? Do you have to pay to sign up for the biweekly plan? And if your financial situation changes, can you go back to making monthly payments? Most servicers will let you go back if you give them 30 to 60 days' notice.
You have options if your servicer doesn't have a formal biweekly program. You can pay your monthly payment on time, then send an extra payment each year that is equal to one month's worth of principal and interest. Tell that extra payment to go toward the principal only. You could also divide your monthly payment by 12 and add that amount to each payment. You would add about $175 to your monthly payment of $2,098, which would give you the same 13 payments per year. It's a do-it-yourself version of every two weeks.
Before you finish, one more thing. Check to see if you can cancel or pause the biweekly plan if your needs change. Life throws you curveballs. At AmeriSave, we always try to make your payment plan fit with how your money really works, not just what looks good on paper. Most servicers will let you go back to monthly payments with 30 to 60 days' notice, but make sure to get that in writing.
Not everyone wants to commit to a rigid biweekly schedule, and that's fine. There are other ways to get similar results while keeping more control over your cash flow.
One extra payment per year. This is the closest equivalent to biweekly without changing your payment frequency. Pick a month when you have extra cash, maybe after a bonus or tax refund, and make an additional full payment directed toward principal. According to the Federal Reserve Bank of St. Louis, mortgage rates have fluctuated between 6% and 7% over the past couple of years, making any extra principal payment a solid return on your money compared to many savings accounts.
Round up your monthly payment. If your payment is $2,098, round it up to $2,200 or $2,300 and specify that the extra goes to principal. It's small but consistent, and it adds up. Over a year, rounding up by $200 per month puts an extra $2,400 toward your principal.
Lump-sum payments when you can. Got a bonus at work? An inheritance? A tax refund? Applying even a one-time lump sum directly to your mortgage principal can shave months off your term. There's no schedule to follow. You just make the payment when the money is available.
Refinance to a shorter term. If you can afford a higher monthly payment, refinancing from a 30-year to a 15-year mortgage forces you to pay off faster and typically comes with a lower interest rate. AmeriSave offers both 15-year and 30-year options, and comparing the total cost of each can be eye-opening.
Making mortgage payments every two weeks won't change your finances overnight. But they will slowly eat away at your balance, shorten the length of your loan, and save you a lot of money in interest. The plan works best if you get paid every two weeks, plan to stay in your home for a while, and have already paid off debt with higher interest rates. If those boxes are checked, it's one of the easiest things you can do. AmeriSave can help you decide if this plan works for your current loan and your long-term goals. Making biweekly payments is definitely one of the most boring but smart financial choices you can make.
The amount you save will depend on how much you borrow, how long the loan is, and what the interest rate is. If you have a $350,000 mortgage with a 6% interest rate for 30 years, making payments every two weeks can save you $62,000 to $67,000 in interest over the life of the loan. Higher rates mean more money saved, while lower rates mean less money saved. The extra payment you make each year goes right to your principal, which lowers the amount of money that will earn interest in the future. You can use AmeriSave's mortgage calculator to figure out exactly how much your loan will cost. Even small changes in interest rates can change the final number, so use your real rate.
If you switch to biweekly payments, you should be able to pay off your 30-year loan four to six years sooner. The exact amount depends on when you start and what your interest rate is. You should be able to pay off your loan in about 25 years if you borrow money at 6% and make payments every two weeks. People who borrow at 7% might be able to save even more time. If you start making biweekly payments later in the loan, the effect is less because you've already paid most of the interest upfront. Check out AmeriSave's current rates to see how they affect your payoff schedule.
Biweekly means every two weeks, or 26 times a year. Bimonthly means two times a month, which is 24 half-payments a year. The two extra payments you make every two weeks add up to one extra full monthly payment every year. This is where you really save money. If you pay your loan off every two months, it might help you budget by breaking it up into smaller parts. However, it won't really shorten the length of your loan or the amount of interest you pay. If you want to pay off your mortgage early, paying every two weeks is the best way to go. Depending on your servicer, you can choose either schedule for your AmeriSave loan.
No, paying every two weeks won't hurt your credit score. Every month, your loan servicer still sends reports to the credit bureaus. Your account will be current as long as you pay the full amount on time. In fact, paying off your mortgage faster can help your credit score over time by lowering the amount of debt you owe. Make sure that each payment every two weeks goes through and doesn't bounce. That's the most important thing. If you want to stay on top of things, you might want to set up automatic payments through AmeriSave's online portal.
Most loan servicers will let you change your payments from biweekly to monthly. You may have to give your servicer 30 to 60 days' notice, depending on their rules. Most of the time, reverting doesn't cost anything, but you should get this in writing before you start. If you go back, you won't lose any progress you've made because the extra payments you've already made toward your principal will still count. AmeriSave can help you figure out which schedule works best for you right now.
No, lenders and servicers don't have to let you pay every two weeks. Some businesses let you sign up online, while others require you to call and ask to sign up. You can do it yourself by making your regular monthly payment plus one-twelfth of the principal payment each month, or by sending one extra full payment every year if your servicer doesn't offer it. The CFPB says that most people who have qualifying mortgages can make extra payments without having to pay a fee. This means that you can always pay more, no matter what your servicer's official programs say.
It depends on who your servicer is. Many lenders, especially those with websites, offer free biweekly payment plans. Some third-party companies, on the other hand, charge $200 to $400 to set up an account and $2 to $5 for each payment. If you make more than 26 payments, those transaction fees could add up to $52 to $130 a year. Always ask about fees ahead of time and compare the total cost to the amount of interest you expect to save. You can learn about your payment options and what's available at the AmeriSave Resource Center.
Yes, most types of loans, like FHA, VA, USDA, and regular mortgages, can be paid off every two weeks. The loan program itself isn't important; what's important is whether your loan servicer lets you make payments every two weeks. Borrowers with FHA and VA loans can make extra principal payments without having to pay a fee, according to federal rules. You can always add extra to each monthly payment if your servicer doesn't let you make automatic biweekly payments. This works for all kinds of loans. You can pay ahead of time with both AmeriSave's FHA loans and VA products.
Because there are 52 weeks in a year, a biweekly schedule means that two months will need three half-payments instead of two. That's how you get your thirteenth full payment. If a borrower pays $1,049 every two weeks, they will pay $3,147 toward their mortgage in two months, which is more than the usual $2,098. You should save a little extra money each month to get ready for this. Many people who borrow money set up automatic payments from their paychecks and don't even notice the difference. Check out AmeriSave's mortgage tools for help with your budget.
Both methods work, but they do so in different ways. Biweekly payments are easier because they automate the process and work with the biweekly paycheck cycle. You have more control when you pay more each month because you can choose how much to add and change it if you need to save money. The interest savings are almost the same in both cases if you put the same total extra amount toward the principal. The best plan for most people is the one they will actually follow. You can use AmeriSave's prequalification tool to look at your options and see how different payment plans will change your loan.
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