How Adjusting Your Mortgage Payment Frequency Can Save You Time and Money

Mortgage Tips Craig Barton 24 Mar

How Adjusting Your Mortgage Payment Frequency Can Save You Time and Money

When it comes to paying off your mortgage, small changes can lead to big savings. One of the simplest yet most effective strategies to cut down on your mortgage’s amortization period (the time it takes to fully repay your loan) is adjusting your payment frequency. By making more frequent payments, you can pay off your home loan faster and reduce the amount of interest you pay over time.

Let’s break down how this works and why it benefits you as a homeowner.

Understanding Mortgage Payment Frequency Options

Most lenders offer several different payment schedules:

  1. Monthly Payments: One payment per month (12 payments per year).

  2. Biweekly Payments: Half of your monthly payment every two weeks (26 payments per year).

  3. Accelerated Biweekly Payments: Half of your monthly payment every two weeks, but with the equivalent of one extra full payment per year.

  4. Weekly or Accelerated Weekly Payments: Payments every week, with an accelerated option to reduce amortization faster.

While monthly payments are the standard, opting for a more frequent payment schedule can significantly shorten your mortgage term and reduce interest costs.

How Does Changing Your Payment Frequency Help?

1. Paying More Often Reduces Interest Costs

Interest on your mortgage accumulates daily or monthly, depending on your loan agreement. The more frequently you make payments, the less time interest has to build up. This means more of your payment goes toward reducing the principal rather than just covering interest.

2. Accelerated Payments Cut Down Your Amortization

Switching to an accelerated biweekly payment schedule is one of the best ways to shorten your mortgage term. Since there are 52 weeks in a year, biweekly payments mean 26 half-payments per year—which actually equals 13 full payments instead of 12. That extra payment each year directly reduces your principal, helping you pay off your mortgage faster.

For example, if you have a 25-year mortgage, making accelerated biweekly payments instead of monthly payments could help you pay it off in 22 years or less—potentially saving you thousands in interest.

3. Builds Financial Discipline and Equity Faster

Making smaller, more frequent payments can make budgeting easier and help you build home equity more quickly. Since more of your payments go toward reducing your principal, you’ll own a larger percentage of your home in a shorter time. This is especially beneficial if you plan to sell or refinance in the future.

Real Savings Example

Let’s say you have a $300,000 mortgage with a 25-year amortization at an interest rate of 5%.

  • Monthly payments: ~$1,745 per month

  • Biweekly payments (non-accelerated): ~$873 every two weeks

  • Accelerated biweekly payments: ~$872 every two weeks (but results in an extra full payment each year)

By switching to accelerated biweekly payments, you could pay off your mortgage 3–4 years earlier and save tens of thousands in interest over the life of your loan.

How to Change Your Mortgage Payment Frequency

  1. Contact Your Lender – Most lenders allow you to change your payment frequency with little to no cost.

  2. Choose the Best Option for Your Budget – If you can afford accelerated payments, they offer the most savings.

  3. Automate Your Payments – Setting up automatic payments ensures you stay on track without the hassle of manual transfers.

Final Thoughts: A Simple Change for Big Savings

Adjusting your mortgage payment frequency is a small but powerful strategy that can help you become mortgage-free faster and save thousands in interest. Whether you choose biweekly, weekly, or accelerated payments, the key takeaway is that more frequent payments reduce the amount of interest you pay and shorten your amortization period.

If paying off your home sooner and keeping more money in your pocket sounds good to you, it’s time to explore your payment options and start making your mortgage work for you!

The Benefits of Refinancing Your Mortgage to Pull Equity: A Smart Way to Manage Debt, Fund Renovations, or Plan a Family Trip

General Craig Barton 4 Mar

The Benefits of Refinancing Your Mortgage to Pull Equity: A Smart Way to Manage Debt, Fund Renovations, or Plan a Family Trip

As a mortgage broker, one of the most common questions I get asked is whether refinancing a mortgage makes sense when it comes to managing personal debt or funding significant life expenses like home renovations or a family vacation. The answer often depends on your specific financial situation, but in many cases, pulling equity from your home by refinancing can be an excellent strategy. Let’s break down how refinancing to access your home equity can benefit you.

1. Clearing Up Consumer Debt and Credit Cards

One of the most immediate and significant benefits of refinancing your mortgage to access equity is the opportunity to pay off high-interest consumer debt. Many people accumulate debt from credit cards, personal loans, or medical bills, often at interest rates that can range from 15% to 30% or more. These interest rates can make it hard to keep up with payments, and it’s easy for the debt to feel overwhelming.

By refinancing your mortgage and pulling out equity, you may be able to consolidate your high-interest debts into one, more manageable loan. Mortgage rates are typically much lower than credit card rates—sometimes as low as 3% to 5% for a 30-year fixed-rate loan, depending on market conditions and your credit score. This can potentially save you thousands of dollars in interest over time and help you pay down your debt faster. Plus, mortgage interest is tax-deductible in many cases, which can further benefit your financial situation.

2. Renovating Your Home

Another excellent use of home equity is for funding home improvements. Whether it’s updating the kitchen, adding a bathroom, or enhancing curb appeal with new landscaping, renovations can improve your living space and increase your home’s value. Home equity loans or cash-out refinancing allow you to access the funds you need to tackle those renovations without having to take out expensive personal loans or drain your savings.

Not only does this improve your quality of life by making your home more comfortable and functional, but strategic home improvements can also add significant value to your property. If you plan on selling your home in the future, the return on investment from renovations could help you sell for a higher price than before.

3. Funding a Family Trip or Special Occasion

Life is about creating memories, and sometimes you need a financial boost to make those memories happen. Refinancing your mortgage to pull equity can also be a smart way to fund big-ticket items like family vacations, weddings, or other special occasions.

While it may seem tempting to use credit cards to pay for such expenses, the high-interest rates can make paying off that debt difficult and costly. Using the equity in your home offers you a low-interest option for financing these major life events, allowing you to enjoy your vacation or celebration without the burden of high-interest debt afterward.

4. Flexibility and Control

Refinancing your mortgage to access equity offers flexibility in how you use the funds. Whether you use it to clear debt, renovate, or finance a family trip, you’re in control of how the money is spent. Unlike a personal loan, which often has specific conditions or limits, a cash-out refinance allows you to take advantage of your home’s value without restrictions. Plus, the terms of a mortgage are typically much longer than those of personal loans, giving you more time to repay the loan at a more manageable monthly payment.

5. Lower Monthly Payments

By refinancing your mortgage, you can also adjust the length of your loan, which can potentially lower your monthly payments. If you refinance to a loan with a longer term (for example, from a 15-year mortgage to a 30-year mortgage), your monthly mortgage payments could decrease significantly, freeing up cash for other purposes. While this would result in paying more interest over the life of the loan, it can provide the breathing room needed in your monthly budget, especially when used for larger projects or debt repayment.

6. Potential Tax Benefits

In many cases, the interest you pay on a mortgage is tax-deductible. While you’ll want to consult with your tax advisor to ensure it applies to your situation, using a cash-out refinance to pay off high-interest debt or fund home improvements may offer tax advantages. This can be a smart way to minimize the overall cost of borrowing.

7. Building Long-Term Financial Health

Strategically refinancing your mortgage and using the equity to pay off high-interest debt or invest in your home can help build long-term financial health. By lowering your overall debt load, improving your home’s value, and managing your expenses more effectively, you’re positioning yourself for future financial success. Over time, this can help you increase your equity and grow your wealth.

Things to Consider Before Refinancing

While refinancing your mortgage to pull equity can be a smart financial move, there are a few things to keep in mind before making the decision:

  • Closing Costs: Refinancing typically involves closing costs, including appraisal fees, title insurance, and attorney fees. Make sure you factor these costs into your decision.
  • Loan Terms: Consider the impact of a new loan term. For example, extending your loan from 15 years to 30 years can reduce your monthly payments, but you may end up paying more interest over the life of the loan.
  • Risk of Foreclosure: Remember, your home is used as collateral when refinancing. If you fail to make your mortgage payments, there’s a risk of foreclosure. Ensure that refinancing aligns with your ability to manage your debt in the long term.

Final Thoughts

Refinancing your mortgage to pull equity is an effective strategy for many homeowners looking to improve their financial situation. Whether you need to pay off high-interest credit card debt, fund home renovations, or take that dream family vacation, accessing your home equity can give you the financial flexibility and control you need. However, it’s essential to weigh the pros and cons carefully and consult with a mortgage professional to ensure it’s the right move for you.

As always, I’m here to help you navigate the refinancing process and determine the best financial solution for your needs. Reach out today to learn more about how refinancing your mortgage could help you achieve your financial goals!