Biweekly mortgage payments

[alabamagal]

I'm thinking of setting mortgage parents on my new house I get paid biweekly which I have never had. In my adult life if I do monthly payments my mortgage will be about 50% of my take home so it uses a good portion of that paycheck. If I set it up to come out day after payday. It would make it more like a paycheck deduction. The rest of my bills are spread out through the month.

Currently assuming $0 contribution from DH. But he will start looking for a job once we get fully moved in. His paycheck will be all savings.

Thoughts?

[yogiii]

As long as they aren't charging you more for this "service", I see no issue.

[Peace77]

Has your husband applied for unemployment?

Some mortgage companies won't accept 1/2 payment.  

[cronewitch]

It will mean you are paying 13 annual payments so more expensive per year but shorter mortgage. You will save some interest but rates are low. You could do the same with a monthly payment paid every 4 weeks then send a larger annual payment or whenever random if you want to pay it down.

I used to pay down loans but rates are so low and in the middle you are out the money but your next mortgage payment is still the same amount so no benefit for many years and it reduces your tax deduction. So even if you are saving money it is a cash flow use. One of those personal choices, do what makes you happy but you might wish you had the cash when you want a car or something.

[Tiny]

If the lender will accept multiple payments (one every two weeks) it shouldn't be a problem.   You'll make an extra 'payment' every year. 

The other alternative is to train yourself to 'reserve' 1/2 a payment from each paycheck - and let the $$ sit in checking until you make your routine monthly payment (you'll make 12 payments each year).   This might be difficult if you use a debit card and rely on the automated balance as a true indication of how much $$ you have left. 

[HoneyBBQ]

Paying extra principal in your monthly payment is virtually identical.

[Tiny]

Feb 6, 2015 16:22:28 GMT -5 HoneyBBQ said:

Paying extra principal in your monthly payment is virtually identical.

Yes, it is.  I think the OP was just thinking it would be easier to manage her money if she spread the mortgage payment over her every two weeks paychecks (versus maybe attempting to pull the full amount from every other paycheck.).   I dont' think she was trying to pay extra principle.   Paying Extra principle in her case is either an added perk (or an extra expense!) of making 1/2 a mortgage payment every 2 weeks. 

[alabamagal]

I just trying to better manage cash flow I have always been paid monthly and paid mortgage monthly. Being paid every two weeks just seems odd to me.

DH was trying to start a business in our previous location. He closed business, and LANs to look for a job in new place. No unemployment pay.

[Deleted]

When I was paid biweekly, I really liked the "extra" paychecks twice a year. If paying the mortgage faster were important to you, you could put those towards the mortgage as extra principal.

I agree with the others about making sure the bank accepts them that way and not paying extra for the privilege. Every bank I've dealt with has handled extra principal payments correctly but I'd be afraid that a half payment would be processed as incomplete and trigger all kinds of fees.

[motherto2]

A lot of places actually offer that service, but I don't recall them charging extra for it but I've never considered it. I actually take out half of my mortgage and half of my kid's college loans out of my paychecks in the check register, but only pay them once a month. But in my budget pretty much everything is spoken for, so I don't use my balance for an indicator of what I have actually have. I put as much as I could on auto payment and just take things out on paper from each payday rather than when it's actually spent. But I also keep a slush in the account just in case something pulls out of cycle. Which happens when you have two extra paydays in a year. I wish the Gov't would go to a first and fifteenth cycle and only have two paydays each month. Those extra paydays sure mess people up!

[Deleted]

Feb 7, 2015 14:06:34 GMT -5 motherto2 said:

  I wish the Gov't would go to a first and fifteenth cycle and only have two paydays each month. Those extra paydays sure mess people up!

I had that with my last employer (non-government) and actually missed the biweekly timing.

When I joined a sub of the Prudential in 1985 we were paid weekly- everyone, not just clerical types.  By the time I left 10 years later we were getting biweekly checks but it took them a long time and they actually offered loans to people who thought they might have a cash flow problem due to the switch.