Are you tired of making payments every month yet feeling like you aren’t getting closer to that dream of full home ownership? Well, fret not! In this article, we’ll focus on some powerful bi-monthly mortgage strategies that can help you achieve your dream much faster.
Bi-monthly vs. Bi-weekly and the Basics
First, let’s clear up some keywords for our readers. Bi-monthly, as the name suggests, refers to payments made twice a month. It is important not to confuse this with bi-weekly, which means payments made every two weeks (as explained on our bi-weekly mortgage page). Also, there’s another term, bimonthly, which is often used interchangeably with bi-monthly, but in fact, they both mean the same thing.
Now, let’s tackle the elephant in the room, what is biweekly? Well, it’s related to payments made every two weeks, and you can discover more by visiting our biweekly mortgage page.
The 7 Major Advantages & Surprising Facts of Bi-monthly Payments
Principal Reduction: By making bi-monthly payments, you’re effectively reducing your principal balance faster. The quicker you reduce your principal, the less interest you’re required to pay overall.
Faster Payoff: A bi-monthly mortgage payment schedule can lead to a quicker loan payoff. Take, for instance, a 30-year mortgage; you might find yourself paying it off in 25 years or even less!
Interest Savings: With faster principal reduction, you’ll be accumulating less interest. This can translate into massive savings over the life of your mortgage.
Increased Home Equity: As your principal balance reduces faster, your home equity builds up at a quicker pace. This can be helpful in case of a sudden need for cash or when refinancing.
Flexible & Customizable: Bi-monthly payments allow for greater flexibility since you can modify the scheduling and amount of each payment. Tailor it according to your financial situation and needs.
Surprising Fact: Despite these obvious advantages, less than 1% of homeowners opt for a bi-monthly mortgage plan! Are you ready to join this elite club?
The 3 Golden Tips to Tackle Bi-monthly Payments Effortlessly
1. Budget Well
It’s crucial to have a well-planned budget in place. Remember, a bi-monthly payment schedule means two payments per month, so don’t get caught off guard with insufficient funds. Calculate your bi-monthly mortgage payments with our easy-to-use mortgage calculator and make sure you have enough in your account. This is, of course, good advice for any financial decision – living life by setting goals and budgeting well can help you live life to the fullest.
2. Automate Payments
Set up automated payments for your bi-monthly mortgage schedule. This will eliminate the hassle of manually transferring money and ensure punctual payments.
3. Align Payments with Salary Dates
If you receive your salary bi-monthly, it’s wise to align your mortgage payments with your salary dates. This will ensure you always have sufficient funds for your mortgage payments.
Bi-monthly Mortgages: Common Myths Dispelled
Let’s address some common misconceptions about bi-monthly mortgages.
Myth 1: Bi-monthly mortgages are for people who can’t manage regular monthly payments – Absolutely NOT! Bi-monthly mortgages are much more suited for those who want to pay off their mortgage faster and save on interest.
Myth 2: You end up paying more with a bi-monthly mortgage – FALSE! Although the amount paid per payment is higher, the interest accrual is lower, saving you considerable money in the long run.
Frequently Asked Questions (FAQs)
Is bi-monthly mortgage the same as biweekly mortgage? – No, bi-monthly refers to twice a month, whereas biweekly refers to every two weeks.
Can I change my current mortgage plan to a bi-monthly plan? – Yes, you can! Consult your mortgage lender to make the switch.
How much faster can I pay off my mortgage with a bi-monthly plan? – This depends on your loan terms, but you might find yourself paying off your mortgage several years earlier!
We hope this article has given you the knowledge and confidence to tread the bi-monthly mortgage path. By following the strategies we’ve shared, you’ll be able to pay off your mortgage faster, save money, and own your dream home outright in no time!