In my case is bi-weekly payment worth it?

learnx3 · Joined: 02 Sep 2008 Posts: 1 1.44 Dollars($)

I have received this offer to switch to bi-weekly payments. I understand the concept of one extra payment a year and the effect it has on your mortgage term.
In my case I am planning on adding a few extra payments a year so one extra does not do much for me. About the bi-weekly payments though, from what I understand, you save a bit by making the payment in two week increments. Now my mortgage company charges $4.00 for each payment. So I thought about it and did some math and tell me if this is correct: 1800 (current P&I payment) less 1300 for interest leaves me 500 that goes towards principal. If I was to make a biweekly payment of 250 (just looking at principal) I would be saving 14 days of interest for that 250. Does that sound right? So $250 x [(5.375%/365) x 14 days]= $.51 current savings by switching to bi-weekly. Chump change, I know but I set my auto pay up and well 6$ a year is....well 6$ a year but it will increase. Here is the problem, the mortgage company charges $4.00 per payment. So you lose money right?
Am I totally off by the way I am looking at this?

adonis · Posted: Tue Sep 02, 2008 11:50 pm Post subject:

Hi learnx,

The calculation looks to be ok. But I suggest that you verify it using the Bi-weekly Mortgage Payment Calculator .

Thanks

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