Biweekly Mortgage Payments

[Christopher Giannino]

I spoke with my aunt yesterday and she mentioned how she is all for the Biweekly Mortgage Payments because it really helped her save money.  By paying the mortgage more frequently, she cut down the total interest owed on the mortgage along with paying it off quicker.  What do others, specifically long term Buy and Hold investors, think about Biweekly Mortgage Payments? 

[Joe Villeneuve]

They're all illusions.  Over a 15 year period, you would save on interest...but you are saving tomorrow's value at today's valuation.  This is if you hold onto the property for those 15 years, and never refinance again.  

This is rare.  Most properties are either sold, or refinanced within a 10-12 year period (if not sooner) because of the following reasons:

1 - To take advantage of the appreciation (flip)

2 - To take advantage of the appreciation from the "cash out" and maybe lower the monthly payments due to lower interest rates.  (Refinance)

3 - Recover all the added expenses lost through the cost of repairs and maintenance over those 10-12 years.

Making higher payments, extra payments, etc...just takes away from your cash flow, strips your profits, and in the end just costs you more money.

The banks know this...which is why they sell it.

Also, if you have a contract for 15 years with the higher payments, you are forced to make those higher payments.  Get a 30 year mortgage and pay it off earlier ...at your control...if you want to pay it off faster.  If something comes up, like a need for a new roof...or a vacancy...you are making 30 year payments, instead of 15 year.