Financing short term rental under an LLC.

[Lane Pressley]

Hi everyone, first post since joining bigger pockets. My question is about bi weekly mortgages. We are in the process of getting pre-approved for our first STR and the lender is offering a 30 year fixed rate mortgage, 20% down but they require a bi-weekly mortgage payment.

My question is what are the pros/cons of a bi-weekly mortgage? 

[Account Closed]

Hello Lane, the upside to a bi-weekly mortgage is that you end up paying extra towards the loan over the course of the year, with more going towards principal. With 52 weeks in the year, you make 26 payments which are half the amount of a monthly payment, meaning you make 13 full mortgage payments in a year. Over time, that additional amount paid can have a significant positive impact on the balance you and the time it would take to pay off the loan. In essence, a bi-weekly mortgage obligates you to pay more towards your loan.

The downside, which you might have guessed, is that you end up paying more over the course of the year, i.e. you have to come up with more money towards your loan.