Posted On Jul 18, 2024

Here's how certain payment frequencies can save you money! 
 
A lot of people think paying their mortgage bi-weekly vs. monthly saves a lot of money. The truth is, it only makes a big difference if you pay more. This is called "accelerating" your payments. Let's break it down:

Mortgage Details:

  • Amount: $400,000
  • Rate: 5.00%
  • Term: 5 years
  • Amortization: 25 years

Scenario #1: Monthly Payments

  • Payment: $1,744.81
  • Interest Paid: $70,211.47

Scenario #2: Bi-Weekly Payments

  • Payment: $804.41 
  • Interest Paid: $70,095.45

Difference in Interest Paid: $116.02

Scenario #3: Accelerated Bi-Weekly Payments

  • Payment: $872.41
  • Interest Paid: $68,917.82
Savings from Accelerated Payments: $1,177.63

Why Accelerated Bi-Weekly Payments Save More
When you make accelerated payments, the extra amount reduces your mortgage principal faster, lowering the total interest paid over time. 

By understanding these differences, you can make smarter choices about how to pay off your mortgage (or other debt) faster and save money in the long run.
 

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