Which of these 2 ways will pay off my house sooner?

Question

Paying 1/2 mortgage every 2 weeks or paying 13 full mortgage payments a year. Thanks for any help.

Answer 1

If you make the additional payment immediately or at the beginning of the year, paying 13 full mortgage payments will save the most money.

Just remember this fact: The sooner you lower the principal balance, the quicker the loan will be paid off.

An example:
30 Year Mortgage, $100,000 at 6.007% (to make the payments exactly $600)

Additional payment immediately: Loan is paid off after the 293rd month.

Additional payment at the end of the year (or after every 12th month and NOT beginning right now): Loan is paid off after the 297th month

Biweekly Payments beginning immediately: Loan is paid off after the 294th month.

If you decide to do the biweekly plan, PLEASE do not pay extra for this service. That's a complete waste of money.

Answer 2

It's going to depend on how the mortgage company applies the payments. The difference between the two ways, though, is going to be neglible.

I would go for the 13 payments just to keep the number of payments down so that if there are misapplications by the mortgage company, you can correct them easier.

Either way, I'd check your mortgage account after each payment to ensure that your overpayments are being applied to principal and not just to next month's payment.

Answer 3

It depends on when you make the payments. For example, if you pay the extra 13th payment in January, your interest you pay will be lower all year, thus making each payment after that more principal and compounding the effects over the life of the loan. If you did the 13th payment at the end of the year, you would have been better off with the bi-weekly plan. I would suggest just making extra principal payments whenever you can for as much as you can. Do an ammortization schedule on Excel and watch the effects.

Answer 4

Normally, making the 13th payment will work faster because you are reducing the principal by the full amount of one monthly payment. Assuming a 30-year, $100000 loan at 8%, monthly payments are $774. Making two payments in the 12th month each year would reduce the loan to $94,880 at the end of 3 years. Making semi-monthly payments would reduce the loan to 497,265.51 at the end of 3 years. This compares with $97,270 .61 for the monthly payments without the extra payment.

The 30 year loan would be repaid in 23 years with a 13th payment each year. The semi-monthly loan would save only a few months.

Answer 5

I believe that the first will reduce the mortgage more rapidly, but not by a great deal. Moreover, you need lender agreement to do the first, while you do not with the latter.

Answer 6

start up with the debt that has the utmost pastime value. Pay as lots in the direction of the concept as you may each month whilst paying the minimums on the different debt. as quickly because of the fact the utmost pastime debt is paid, pass down your checklist to the subsequent maximum pastime value. save working your way down till you're caught up. in case you have any credit taking part in cards that furnish low fees of pastime on stability transfers, which would be nicely worth doing. in basic terms be careful of the pass fees, they are able to knock your socks off and not be nicely worth it. solid luck!