{ "media_type": "text", "post_content": "If you choose to pay your mortgage monthly vs bi-weekly, why? We are in the market for our first home and for people like us with savings and stable cash-flow, I’m wondering if there is a reason to pay monthly despite the interest savings of paying bi-weekly.", "post_id": "5eb1900aac7767002a4ac441", "reply_count": 21, "vote_count": 1, "bowl_id": "5e6fe1c31f5e51001d267e46", "bowl_name": "The Work-Life Bowl", "feed_type": "bowl" }

If you choose to pay your mortgage monthly vs bi-weekly, why? We are in the market for our first home and for people like us with savings and stable cash-flow, I’m wondering if there is a reason to pay monthly despite the interest savings of paying bi-weekly.

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Can you invest that money elsewhere to get a return that exceeds your interest expense?

Yup realized that halfway into my day and figured I’d just leave it on the off chance that was the correct interpretation. But thanks for being passive aggressive! Means a lot 😊

No. Just a habit when we were poor as dirt and could not pay bi-weekly.

I don’t change the frequency of payments, but I do double the principle when I have the cash to do so. That being said, I max out my 401k and Roth contributions before investing in mutual funds, and if I have cash left over, then I double the principle. My mortgage interest rate is 3.875%.

Sometimes it doesn’t even matter. Wells Fargo, for example, takes a Bi-weekly payment and “deposits” it until the second one in order to pay monthly.

I just do it to make the paycheck deductions more consistent.

Yep. It’s kinda tricky even when asking your lender, since most lenders will actually sell the loan to one of the big banks for servicing. So there’s the lender you work with to secure the loan, and the lender/bank who services the loan. So you’ll wanna ask about that too

I appreciate the responses - I mean splitting your mortgage payment to being bi weekly. So you’d be paying the same amount as if you were paying monthly but overtime you would save in interest. In one of the many scenarios I put into the mortgage calculator, doing this would save $50k in interest over the life of the loan.
Of course, some people choose to make extra payments. We were thinking of doing both: making extra payments for the first few years as well as doing bi-weekly payments.

I’m interested to understand why people don’t do this (when they have stable cash flow etc) & what I could be missing since this is our first home purchase! :)

It can depend the on the lender. Mine makes you set up something special and pay a process fee, which I refuse to do. I would just rather make an extra principal payment when I feel like it.

We had previously paid ours bi-weekly to even out the payment on cash flow but our lender didn’t apply it bi-weekly like stated before on this thread. The only actual benefit was that it resulted in a twice a year full payment amount applied to principle only. Since the bi-weekly payments draft every two weeks, eventually it leads to an extra two full payments rather than 12 monthly payments over the course of a year. We recently refinanced and are now only making monthly payments. We have a much better cash flow situation then when we first bought so I don’t see the benefit anymore. If we chose to make extra principal payments we can do so when we want to.

My understanding of the benefits to bi weekly payments is that you are essentially making an extra "monthly" payment each year. The benefits of slightly reduced principle mid-month is negligible.

If it helps from a budgeting standpoint or is deducted from payroll, that would just be preference

You can also just pay extra towards principle monthly. I don’t know if that ends up saving more, less or the same than a bi-weekly payment. I recently refinanced and continuing to pay the extra $180 the refinance saved me monthly I pay the house off in 20 years instead of 30.

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