My mortgage company is offering to sign me up for weekly or biweekly, rather than monthly, payments. The program is free, and I’m told it will help me pay off the loan faster. Should I sign up? --M.W., Sacramento, Calif.
TAKE OUR QUIZ: How Smart a Home Owner Are You?
Because a year has 52 weeks—or 13 four-week periods—making weekly payments works out to be an extra monthly payment each year. Making weekly or biweekly payments can be an easy way to help you pay off your loan faster and save money on interest. Paying biweekly on a $300,000, 30-year mortgage with a 4% interest rate rather than monthly will pay off the loan more than four years early (see the biweekly mortgage calculator at Bankrate.com).
But you can accomplish the same goal on your own and maintain more flexibility by making one extra monthly payment each year. Do that whenever you have extra cash, rather than locking yourself into a program. You may have more-pressing uses for the money, such as saving for retirement, building your emergency fund or paying off higher-interest debt. “Unless you are maxing out your 401(k) and IRA, there are other, higher priorities for your spare cash than paying down a low, fixed-rate, often tax-deductible mortgage,” says Greg McBride, chief financial analyst at Bankrate.com.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Visa Is the Worst Dow Stock Wednesday. Here's WhyVisa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
-
Another Analyst Moves to the Sidelines on Tesla Stock After EarningsTesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
-
Five Ways to Shop for a Low Mortgage RateBecoming a Homeowner Rates are high this year, but you can still find an affordable loan with these tips.
-
Hurricane Insurance Claims: 10 Things You Should KnowBecoming a Homeowner Hurricane damage? Know what’s covered, what isn’t and how to make the most of your policy if you need to file a claim.
-
5 Great Places to Buy a Vacation HomeWant a vacation home for remote work or a fun getaway? Here are locations with median prices under $400K.
-
The 25 Cheapest Places to Live: U.S. Cities Editionplaces to live Have a look at the cheapest places to live in America for city dwellers. Is one of the cheapest places to live in the U.S. right for you?
-
Retirees, A Healthy Condo Has a Flush Reserve FundSmart Buying Reserve funds for a third of homeowner and condo associations have insufficient cash, experts say. Here are some cautionary steps you should take.
-
Homeowners Insurance: How to Protect Your HomeBrandon Copeland NFL linebacker and Kiplinger contributing editor Brandon Copeland discusses the ins and outs of homeowners insurance.
-
Cash Home Buyers: New Services Offer Help Making All-Cash OffersBecoming a Homeowner Some firms help home buyers make all-cash offers on homes. Weigh the fees before you sign on.
-
PODCAST: The 2022 Real Estate Market with Daniel BortzBecoming a Homeowner Daniel Bortz doesn’t just write about home sales and housing prices – he’s been in the business. He’ll share insights about the real estate outlook for 2022 and “how-to” tips for both buyers and sellers. Also, the pain of high gas prices.
