Payment Frequency Options
Selecting the right mortgage payment frequency can greatly influence the life and interest of your loan. Here’s a comprehensive guide to help you make an informed decision:
- Payment Frequency Choices: Lenders are flexible with payment options. Choose from:
- Monthly: A consistent payment made once every month.
- Semi-Monthly: Payments made twice a month, totaling 24 for the year.
- Biweekly: Payments made every other week, totaling 26 annually.
- Weekly: Payments made every week, resulting in 52 payments a year.
- Accelerated Biweekly and Accelerated Weekly: Faster-paced payments that help in reducing the mortgage tenure.
- The Accelerated Advantage: Accelerated payment options can significantly reduce the years (or amortization) on your mortgage. Over time, this choice can save you a considerable sum in interest.
- Flexibility in Payment: You aren’t locked into your initial choice. You can modify your payment frequency directly with your lender throughout the mortgage term.
- Crucial Differences:
- Monthly: The same payment on a specific date every month.
- Semi-Monthly: Two consistent payments every month on specified dates.
- Biweekly/Weekly: Payments made every other week or weekly but on the same day of the week. Dates may vary.
- Financial Implications of Accelerated Payments: Opting for accelerated payments means a slightly higher average monthly payment. For instance:
- Monthly: $1559.12/month
- Accelerated Biweekly: $779.56/payment x 26 payments/12 months = $1689.04/month. Be prepared for three mortgage payments during longer months, which occurs three times a year
Your specific mortgage payment frequency options will be presented to you upon receiving full lender approval. Choosing wisely can make a notable difference in how quickly you achieve mortgage freedom.
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