When you think of a mortgage payment, you probably picture one payment each month for 30 years. This is simple, familiar, and completely accurate. but, it is not the only option.

Some homeowners choose to make bi-weekly mortgage payments, meaning they pay every other week instead of once per month. And if your first thought is, "Why would I do that? Isn't that more payments?" -- you're not wrong. You do end up making more payments per year, but that's exactly where the benefit comes in.

Let's back up for a second.

When you take out a mortgage, each payment is split between principal (the amount you borrowed) and interest (what you pay the lender for loaning you the money). Early on, because your principal is still high, most of your monthly payment goes toward interest. For example, paying 6% on a $300,000 balance is very different from paying 6% when you've already paid the loan down to $50,000. Over time, as your principal shrinks, the interest portion gets smaller, thanks to a process called amortization.

What most people don't realize is just how much interest you pay on a 30 year mortgage. Here's a quick example:

Home price: $300,000
Down payment (20%): $60,000
Loan amount: $240,000
Interest rate: 6% fixed

Monthly payment: ≈ $1,438.92
Total paid over 30 years: ≈ $518,011
Total interest paid: ≈ $278,011

Not only is that a lot of interest, but it is more than the amount our hypothetical buyer originally borrowed.

So how do bi-weekly payments help?

Instead of making 12 full payments a year, you split your monthly payment in half and pay that amount every two weeks. Since there are 52 weeks in a year, you end up making 26 half-payments -- which equals 13 full monthly payments instead of 12.

That "extra" payment typically goes directly to your principal, and that's where the benefit comes in. Paying down the principal faster means you're paying less interest over time, because interest is simply a calculation based on the remaining principal balance.

Using the same loan terms of our hypothetical buyer from earlier, let's see how things change with bi-weekly rather than monthly payments:

Home price: $300,000
Down payment (20%): $60,000
Loan amount: $240,000
Interest rate: 6% fixed

Loan term with monthly payments: 30 years
Total interest paid: ≈ $278,011

Loan term with bi-weekly payments: ~25 years
Total interest paid: ≈ $228,000
Interest saved: ≈ $50,000

So, by making bi-weekly payments, this hypothetical buyer isn't just saving nearly $50,000 in interest -- they're also owning their home about five years sooner than they would with traditional monthly payments. That's a big deal, because it means building equity faster, paying far less in interest, and giving yourself more financial flexibility down the road.

Should everyone switch to bi-weekly mortgage payments? Not necessarily. At the end of the day, it's just another tool. But knowledge is power, and if your goal is to save money on interest or pay your home off quicker, bi-weekly payments are definitely something worth considering.  Of note, you'll want to check with your lender before starting to send in bi-weekly mortgage payments to confirm if and how they will allow you to pay in that manner.

If you want to learn more about how this works -- or want to know if it could make sense for your situation -- feel free to call or text me, Luke, at 540-830-5097 or email me at luke@lukewrogers.com.