VA borrowers often wonder about bi-weekly payments, a common strategy to accelerate your mortgage payoff. The idea is to make payments every two weeks, rather than once a month, which adds up to making an extra monthly payment each year.
If you’ve read the chapter, Paying “Extra” on Your Loan – Mortgage Rigormortis!, you already know that we are not fans of accelerating your mortgage payments and principal reduction. However, the bi-weekly payment concept and its drawbacks and benefits deserves attention.
Bi-weekly payments are commonly structured as half the amount of a regular required monthly payment. The borrower divides a mortgage payment exactly in half and then pays that half mortgage payment every two weeks. The borrower effectively makes TWENTY SIX bi-weekly payments, equaling THIRTEEN whole mortgage payments over the TWELVE month year.