Can maying bi-monthly mortage payments help earn equity on your home?

Question

If your mortgage/PMI/Property taxes amount to $1000/month, and you pay $500 on the 1st of the month and $500 on the 15th, will this help you gain equity on the house faster and, in turn, pay off the loan quicker?  Or will it work out to be the same as making one lump sum each month?

Answer 1

It will do nothing. What you may be thinking is some mortgage companies will allow you to pay half of your payment, every other week. They usually charge extra to do this. But all this does is to get you to apply one extra pay a year (26 *.5 = 13).

Any additional you pay over and above your monthly payment will pay your loan off early, and save you interest in the long run, and theoretically, increase your equity faster.

You can increase your equity in two ways, pay off your loan faster, or increase the value of your home.

Answer 2

the mortgage company has to allow it. and some only apply the extra payments at the end of the year. My mortgage company lets me pay extra principal each month, so I send along an extra $30 or so. This gets applied to the principal the next month, not at the end of the year - in 2 yrs, I've already cut a couple of payments off the back end of the mortgage-actually, I have 2 mortgages and a new investment property mortgage starting soon and a land loan and I pay extra on all of them every month to pay them off quicker

Answer 3

Most companies will charge you a fee to make bi-monthly or bi-weekly payments.  I'd just add extra to your once-a-month payment.

If you owe $1,000 per month but pay a $2,000 payment per month, the loan will be paid off in about 6 years.

Answer 4

No, that will do nothing. What you are supposed to do is pay $500 every two weeks...not twice per month. Here is the difference...

Twice per month = $12,000 per year
Every 2 weeks = $13,000 per year

Got it?