Is it a wise idea to pay monthly mortgage in two payments a month instead of one lump sum?

Question

Is it a wise idea to pay monthly mortgage in two payments a month instead of one lump sum?

Answer 1

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Answer 2

It is a great idea IF your mortgage company credits the 1/2 payments when they come in.  Some will 'hold your 1/2 payment until the 1st of the month and then credit it.  

By paying in 1/2 payments and getting it credited at the time it comes in, you reduce the amount of time that the principal from those 1/2 payments accrues interest.  It seems like nothing initially, but in the long run you will save tons of money.  

Better still is making a 1/2 payment every 2 weeks (versus 2 payments a month - 2 x 12 = 24).  This equates to the benefit of the 1/2 payments (described above) plus an extra full payment every year (52 weeks divided by 2= 26 payments).  This will knock about 12.5 years off a 30 year loan IF you stick with it from the beginning.

Answer 3

It is a wise idea if you want to stay in the house for the next 30 years but if it investment is not a wise idea

Answer 4

Bi weekly mortgage payments will cut down signifigantly the interest paid on the loan.

Answer 5

You may not be able to do that with your lender. You need to check with them. But I don't believe (my opinion) that making two 1/2 payments is going to make any difference. If you are trying to pay off the mortgage sooner, yo might want to consider making one extra payment per year.  Otherwise, there were 15 year loans that do the same thing.  

Answer 6

I don't think its a wise idea because you need to go to the mortgage lender twice instead of once a month to make your monthly payments.