Maximizing Your Mortgage Repayment: Biweekly Payments vs Manual Adjustments

Many banks and mortgage lenders offer the option for biweekly mortgage payments as this can help borrowers pay off their loans faster and reduce interest costs over time. Some of the well-known banks and lenders that typically provide this option include Wells Fargo, Bank of America, Chase, Quicken Loans (now Rocket Mortgage), US Bank, and PNC Bank. It's important to check with individual lenders for their specific terms as not all may advertise biweekly options prominently. Additionally, some lenders may allow you to set up biweekly payments through their online banking platforms or might require a specific request. Always read the fine print and confirm any fees associated with setting up biweekly payments.

Which Bank Allows for Biweekly Mortgage Payments?

Most major banks and mortgage lenders offer the option for biweekly mortgage payments. Banks such as Wells Fargo, Bank of America, Chase, and Rocket Mortgage (formerly Quicken Loans) provide this option. However, always check with your specific lender to confirm this service is available.

Manual Adjustment: An Alternative Strategy

If your bank or mortgage servicer does not offer the biweekly payment option, you can still achieve the benefits of an extra payment by manually adjusting your monthly auto pay. By adding an extra 8.33% towards the principal each month, you can mimic the effect of making biweekly payments. Here's how it works:

The Biweekly Payment Strategy

A biweekly payment strategy involves making 26 half-payments instead of 12 full payments each year. For example, if your monthly principal and interest (PI) payment is $2,000, paying $1,000 every two weeks will result in a total of $26,000 paid in a year, rather than $24,000. The extra $8.33 (rounded) is consistent in the biweekly strategy. So if your PI is $3,000, adding $250 per month to your monthly auto payment will have the same effect as biweekly payments.

Calculating the Additional Payment

To calculate the additional payment manually, subtract any escrowed taxes and insurance from your monthly payment. Then, add the 8.33% to the remaining principal amount. This simple strategy can help you save significantly on interest and shorten the duration of your mortgage.

Considerations for Manual Adjustment

There are a few rare caveats to consider. First, check for pre-payment penalties, as almost all have been eliminated after 2014, but a few non-qualified mortgages may still carry them. If you have a conventional loan, it typically does not have a pre-payment penalty. Secondly, ensure that the additional payment is clearly marked for application towards the principal. Some servicers might place the money in escrow, which would negate the benefit.

Dynamic Strategies for Mortgage Repayment

For a more dynamic strategy to pay off your mortgage, consider using a free calculator that optimizes the additional payment based on your loan amount and interest rate. Our calculator can suggest an optimized payment range of 5% to 20% of your monthly payment. The goal is to maximize the benefit, minimize interest, and shorten the loan duration while keeping the cost of extra payment minimal.

Optimize Your Mortgage Payment and save up to $100,000 in interest over the life of your loan.