Am I really saving with a bi monthly mortgage payment?
Answer:Yes, you have some benefts. The bi-monthly mortgage payment is often said to allow you to save a huge portion of cash if you have the discipline to make those payments regularly, but it's not like this. In fact, paying your mortgage on a bi-monthly basis cannot save you around 30% of the overall accrued interest on the loan, as it is said to. This is a wrong understanding of the term - it is the biweekly mortgage payments that cut a huge portion of your overall interest. Bimonthly payments only reduce several months of mortgage payments.
However, to get any benefits with bi-monthly payments, you have to make sure the lender is applying your payment right after it has been received and not when the second portion of the monthly mortgage payment arrives. Making bi-monthly mortgage payments is not the same as making bi-weekly mortgage payments.
Usually, to start making a bi-monthly mortgage payment, you shouldn't be charged prepayment penalties. Rather, you should be able to discuss this option with your lender. You may be offered to convert your regular mortgage payment into a bi-monthly mortgage payment for a fee.
Our advice: Be sure to ask your lender about FHA loans. FHA loans have very competitive interest rates because the loans are insured by the US Federal Government. Even if you have had serious credit problems, such as bankruptcy, it is easier to qualify for an FHA loan than a conventional loan. Also, taking an FIXED rate loan while the interest rates are still low is a smart idea. Check your eligibility here:
| Not at all | Definitely |
Mortgage QnA is not a common forum. We have special rules:
- Post no questions here. To ask a question, click the Ask a Question link
- We will not publish answers that include any form of advertising
- Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
Common misspellings: mortage and morgage