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Duplicate invoice example for Mortgage

what would you do if you were mortgage-free most homeowners dream of the day that they can ditch their payment freeing up so much space in their budget for other spending saving and investing but what does it take to make that dream a reality there are many different approaches to becoming mortgage-free faster one sometimes overlooked strategy is exploring bi-weekly mortgage payments versus monthly to see if adjusting your payment date can fast-track you to debt freedom to see the impact of bi-weekly payments it's important to understand exactly how a mortgage payment works then you can crunch the numbers to see if the results of bi-weekly mortgage payments versus monthly payments make sense for you let's explore to see if this option is right for you before we do please consider giving me the youtube triple thanks as you're watching this video that's hitting the like button subscribing to the channel and then commenting down below i'd appreciate you considering it as i am looking to grow this small business of mine this year thanks so much i appreciate it okay let's first talk about the anatomy of a mortgage payment understanding the anatomy of your mortgage payment is the first step in accelerating your payoff journey a mortgage payment has two parts principal and interest the principal of a mortgage is the amount of money that you borrowed to purchase your home the interest is what you pay the bank or your lender for loaning you the money interest rates can fluctuate depending on when you take out your loan regardless of the rate the more money you borrow the more money you will pay in interest depending on how your mortgage is structured you may also have property taxes homeowners insurance and even private mortgage insurance bundled into your mortgage payment if you escrow your account the lender sets a portion of your payment aside for taxes and insurance when the bill is due they pay it on your behalf let's talk about how using an amortization schedule can help you understand more your current mortgage bill will have a breakdown on it that indicates how much you are paying towards the principal and how much you're paying towards interest someone at the start of their mortgage payoff journey is going to pay much more on interest than principal to take the guesswork out of what you're paying and when you can check your amortization schedule this is a table that breaks down each of your regular mortgage payments by interest and principal over the life of your loan using this table will help you see how you gradually pay less toward interest and more toward principal over time let's do a quick example so you can see how that table breaks things down over time i'll put in some of my original loan details from when we paid off our mortgage early by the way you'll find this calculator in a blog post of mine in the description below so check it out if you want to play around or honestly you can just google mortgage amortization calculator and you'll find one anyway we had 195 000 for our original loan our loan term was 15 years our interest rate was 3 percent now you can do the calculation with additional monthly principal payments uh like we did on average we threw an additional three thousand dollars per month so i'll add that in here as well we hit calculate and voila here's the schedule details from month zero all the way through month 48. now you can remove the extra payments and see what your loan looks like without it so let's do that extra payments are now zero hit calculate and voila new amortization schedule month zero all the way from 15 years or 150 or 180 months for that matter i like 48 months versus 180 months but that's just me anyway take your loan numbers and play around here it's fun to see how fast it can all go paying off your mortgage early has a ton of benefits including saving you tens of thousands of dollars in interest as you can see from that schedule we looked at as a result many people are interested in early payoff strategies for some homeowners making bi-weekly mortgage payments can play an important role in this early payoff let's talk bi-weekly mortgage payments versus monthly if you're working on becoming mortgage-free you're probably wondering how to accelerate that journey right understanding how you currently make payments and comparing them to a different payment schedule can help you see if this strategy might work for you most people are familiar with monthly mortgage payments right that's a that's an easy one monthly payments are typically how mortgages are discussed when you're in the process of buying a home and very likely how your loan is set up monthly mortgage payments make sense for a number of reasons they're the most common kind of payment they align with monthly budgets the payment due dates are consistent from month to month it's more similar to paying rent monthly which can help transitioning from renting to home ownership and make it feel more comfortable and familiar if there are so many advantages to monthly mortgage payments and they're the most common kind of payment what's not to love right in a word interest when it comes to bi-weekly mortgage payments versus monthly monthly payments will cause you to pay more interest on your loan while it might not seem significant when you compare one monthly payment to two bi-weekly payments when it's multiplied out over the life of a 15 year or 30 year loan that's some serious money let's learn about bi-weekly mortgage payments to see if you should make the switch another mortgage payment option is to consider to pay half of your mortgage every two weeks these bi-weekly payments might add up to the same amount as your monthly payment but the money is distributed differently as a result bi-weekly mortgage payments can help you reach debt freedom faster and save you a lot of money here's how when you make a monthly payment you pay your mortgage 12 times per year or once per month when you pay bi-weekly you make a payment every other week that means you make 26 payments instead of 24. those two extra payments shave off an entire mortgage payment without you or your budget even noticing let's use some simplified math to see how this works imagine that you owe 2 000 a month on your mortgage when you pay monthly you make 12 payments of two thousand dollars for a yearly total of twenty four thousand dollars however if you pay every two weeks that means you are paying one thousand dollars every other week since there are 52 weeks in a year a bi-weekly payment calendar would have you making 26 payments of 1 000 for a yearly total of 26 000 by using the calendar to your advantage you now have a mortgage principle that is 2 000 lower to start the following year a whole mortgage payment erased and a smaller principle to pay interest on it's a win-win so if the math looks so good why doesn't everyone pay bi-weekly well before you hop on the bi-weekly bandwagon there are some considerations that you'll want to make not every lender allows for bi-weekly payments in many cases you have to opt in to enroll into a bi-weekly payment program in that instance you may incur a fee before you opt in you want to crunch the numbers to make sure that you come out ahead obviously for bi-weekly payments to make sense for you you have to ensure that your lender allows for them you also want to note that paying bi-weekly won't bump up your credit score while it may seem like the credit bureaus should throw some brownie points your way for making additional payments this isn't the case when the bureaus review your data they use a monthly time frame making bi-weekly mortgage payments isn't the only way to pay off your mortgage faster in fact if the fees are too high you may also explore if you have the ability to make extra payments to your mortgage while it doesn't work the exact same way as paying biweekly it's another strategy you might consider to pay off your mortgage faster you could also consider refinancing your loan to obtain a lower interest rate or doing a mortgage recast to create smaller monthly payments for more alternatives and inspiration check out the steps that we use to pay off our mortgage in under five years i'll put that link in the description below there's no perfect pathway to debt freedom that works for everyone my friends but learning from the stories of those who have already paid off their mortgage early can certainly open your eyes to all the different options you have in closing a lot of us we don't think twice about when we make our mortgage payments we get the bill we make a note of the due date and we pay it but exploring bi-weekly mortgage payments versus monthly might allow you to painlessly shave a whole extra mortgage payment each year to see if this bi-weekly strategy is right for you crunch the numbers and make sure to watch out for any possible fees it's very possible that this strategy will help you pay off your mortgage early without paying any extra per month but enough for me i would love to hear from you what do you think of bi-weekly mortgage payments versus monthly what strategies are you using to pay off your mortgage please let us know in the comments below this is andy hill from marriage kids and money signing off carpe diem [Music] bye