Question:

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.

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