About Bi-weekly Payments for an Existing Mortgage
The savings you can get from bi-weekly mortgage payments are due to the fact there are 52 weeks a year. That means you'd make 26 bi-weekly payments. If instead of making monthly payments you pay half that amount every two weeks, that works out to the equivalent of 13 monthly payments – one extra payment per year.
Of course, that money has to come from somewhere. For that reason, bi-weekly payments often work best for someone who is paid on a weekly or bi-weekly basis, rather than once or twice a month. You can take the same amount out of every paycheck for your mortgage without having make a lot of changes to your budget or save up for those months when you'd be making an extra payment.
That extra payment doesn't simply shorten your mortgage by one month a year. Because of the way compounding interest works, those extra payments shorten your loan even more, and reduce your interest costs over the life of the loan as well. You also build equity faster, which can speed the day you can cancel private mortgage insurance (PMI) if you put less than 20 percent down on your mortgage.
Bi-weekly payments are most effective with home loans that have a relatively high mortgage rate. That's because there's more interest to take a bite out of by paying down the loan more quickly. But even with the low rates that have been common in recent years, a bi-monthly payment schedule can still shave several years off you mortgage and save you thousands of dollars in interest costs.
Using the Bi-weekly Calculator for an Existing Mortgage
The calculator will figure your bi-weekly mortgage payments for fixed-rate mortgages of up to 40 years. Your bi-weekly payment will simply be half of what a monthly payment would be for the same loan.
For purposes of amortization, the calculator assumes you will make one extra bi-weekly payment every six months, regardless of when those payments might actually occur on the calendar. (On a bi-weekly schedule, there will be two months a year when you make three mortgage payments, though those may not be six months apart. But for purposes of amortization, that makes little difference).
As this is an existing loan calculator, the calculator will take the date you began making payments and figure your savings from the current date forward.
Enter the following information:
- First payment date: This is the date you made your first payment on your current mortgage.
- Original mortgage amount: How much you borrowed. The calculator will determine your current balance based on regular amortization; that is, the normal rate you would pay down the loan without additional or missed payments.
- Interest rate: Your mortgage rate
- Monthly escrow payment: This is optional. However, if your escrow payments are included as part of your loan, including them as part of your "extra" biweekly payments each year will help pay down your loan faster.
- Monthly prepayment amount: This is also optional. This would be any additional amount you'd like to pay on top of your regular biweekly payments.
Once you've entered your information, the calculator will determine your monthly and bimonthly payments. Your interest savings will be shown at the top of the page and the time it will take to pay off the loan will be just below the calculator.
For a more detailed breakdown and amortization schedule, click "Show report" at the top of the page.
Another possibility to save money would be to refinance your mortgage. Click "Get Free Quote" to get personalized refinance or home equity rate quotes from lenders.