McCarthy Thielman Realty
McCarthy Thielman Realty
Brinda S. Thielman, Broker/Owner, McCarthy Thielman RealtyPhone: (602) 228-9194
Email: [email protected]

It Pays to Pay Your Mortgage Twice a Month

by Brinda S. Thielman, Broker/Owner 06/06/2021

Photo by cottonbro from Pexels

We all know how hard the beginning of the month can be; it seems like there are a million bills due all at the same time, and one of those bills is usually the most expensive among them all—your mortgage. After you budget for all of your expenses, that gigantic payment can really make a big impact on your bank account. That's just one reason why some homeowners choose to pay their mortgage in halves twice a month, rather than monthly as a whole.

Paying Your Mortgage Differently Than Traditional Monthly Payments

You might be able to choose to pay your mortgage bi-weekly or semi-monthly. Generally speaking, these are the same thing. However, a few days' difference here and there actually means that you would make 26 payments throughout the year if you paid bi-weekly, which is the same as 13 months' worth of payments. Semi-monthly payments would be paid twice a month, which comes out to 12 months' payments at the end of the year. Both are beneficial for several reasons, but obviously, you'll be paying a whole extra month if you pay bi-weekly, which can really cause the savings to add up over the life of a loan.

The difference comes in the timing in which your payments would be due. If you're paid on the 15th and last day of the month, bi-weekly payments can be tricky because there will be two times a year in which your payment will be due before your paycheck arrives. However, you can still opt for semi-monthly payments that get paid in accordance with your pay schedule.

The Benefits of Paying Your Mortgage Twice a Month

Let's start with the obvious benefit: you'll spread one amount of money across two payments. That means you'll have more money leftover during the initial payment date than usual and you can put that extra cash toward principle or put it in a savings account until the next payment's due so it can collect a little interest. Not only that, but because there's less time between payments, there will be less interest since interest is calculated at a daily rate. Since each payment will push a little more money toward principle, you'll actually end up paying your mortgage off faster than you would if you paid monthly in most cases. Be sure to check your loan documents to verify that you don't have a pre-payment penalty before you put this plan into place!

Before you commit to (or keep going with) monthly payments on your mortgage, stop and think about the benefits you could gain from splitting your payments in half. This is a great way to spread out the cost of one of your biggest expenses while simultaneously ensuring you're chipping away at your principle. 

About the Author
Author

Brinda S. Thielman, Broker/Owner

Hi! I'm Brinda Thielman. Thank you for your interest in exploring Arizona real estate with me.

As a native Arizonian, I have seen the growth in the “Valley of the Sun” first hand. With over 30 years in the real estate industry, I know how challenging and intimidating buying and selling a home can be. That's where I come in! When I started my real estate career, I quickly found I loved every aspect of the home buying and selling process, from touring a home, researching the best mortgage loan for my clients, new construction details and even the negotiation and closing process. 

In 2015, I help found McCarthy Thielman Realty, LLC. Today it is one of the leading boutique real estate firms specializing in North Phoenix real estate.

My mission is to help you accomplish your real estate goals and dreams - "I'll Lead You Home!"