Accelerated Bi-Weekly Mortgage Vs Semi-Monthly Mortgage

For most potential homeowners, things can seem pretty straightforward until they get to the point where they start mortgage shopping. With all of the different terms and applicable rules surrounding them, it’s normal to experience confusion. When you’ve thought you finally got a good grasp on what mortgage you might want, a mortgage lender might bring up another three or four options that you might want to consider. You might be asked if you want to try out accelerated bi-weekly mortgage payments. If a mortgage lender does ask you to consider that, you’ll want to do a careful synopsis on the differences between bi-monthly vs semi-monthly mortgages.

If you’re financially able to make accelerated bi-weekly payments, then that leaves you with a few benefits, primarily with a decent chunk of savings on interest.

What Are The Monthly Payment Schedules Involved?

Many mortgage payment schedules are done on a one payment per month basis. This payment schedule will equal a total of twelve mortgage payments throughout the course of the entire year.

What About Semi-Monthly Payments?

With semi-monthly payments, you’ll be making two mortgage payments every month. For the majority of people, paying on the first day of the month and the fifteenth day of the month works best them. If these days don’t work for you, you can always customize them to what does. Semi-monthly payments will result in twenty-four payments being made over the course of the year.

What Are Accelerated Bi-Weekly Mortgage Payments?

With accelerated bi-weekly payments, you’ll be making the mortgage payments twenty-six times a year. These mortgage payments will be done every two weeks. With this option, you’ll be able to reap some savings on the interest you’ll be playing throughout the course of the mortgage. While the accelerated bi-weekly mortgage might not be for everyone, it is useful for those that can manage it.

Let’s take a look at an example of monthly mortgage payments in comparison to an accelerated bi-weekly mortgage payment.

If you have a mortgage of $300,000 with an interest rate of 2.69% for five years, the monthly mortgage payments would total $1372.45. If you go with the accelerated bi-weekly mortgage payments, it will be $686.23. This would turn a twenty-five-year amortization into one that’s almost three years shorter in duration.

What Should You Go With?

The recommended course of action when it comes to mortgage schedules is to go with the accelerated bi-weekly mortgage payments.


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