What is your Mortgage payment frequency?

When I was setting my Mortgage Payment goals, my mind went fuzzy on what the difference was between Accelerated Weekly and Weekly so I decided to unfog my memory bank on this matter.

Here is a chart that goes through an example, starting with a Monthly payment of $625.02 and going through the different payment frequencies and related amounts:

Monthly means you pay once a month, for example the 1st of the month.

Weekly means you pay every week, for example every Monday BUT to arrive at what you pay it is derived from taking the Monthly amount x 12 months /52 to give you your weekly payment figure (625.2 x 12/52 = $144.24).

Bi-Weekly* means you pay twice a month, usually the 1st and 15th of the month.  To arrive at this figure you would take the Monthly amount x 12 months/24 (625.2 x 12/26 = $288.47). * In my mind, this really should say Semi-Monthly.

Accelerated Weekly is the same as Weekly with one key difference. First, it means you pay once a week such as every Monday as you would on the Weekly payment frequency.   The difference though lies in the following calculation. You would take the Monthly amount/4 (625.02/4).  Each year has 13-4 week periods, so you would be paying an extra month per year.

Accelerated Bi-Weekly means you pay every two weeks, not two times a month.  For example using the month of May if you pay every Tuesday, it would mean a payment on May 1st, 15th and 29th.  To arrive at this figure you would take the Monthly amount x 12 months/26 (625.2 x 12/26 = $312.51).

Ideally it would be beneficial for most people to move to an Accelerated Weekly or Bi-Weekly payment schedule for the sole purpose of paying less interest to the banks and being mortgage/debt free sooner.  I recognize that for some people who have very tight budgets, paying anything extra within the month or even year is simply not an option. If that is the case then the second best choice would be a Weekly Payment Frequency, followed by a Semi-Monthly Payment Frequency.

So in reviewing these frequency descriptions, our payment frequency can be classified as Weekly or Accelerated Weekly depending on how you look at it.  To come up with our weekly payment of $625 per week, we simply figured out what was the maximum we were able and willing to put down each week.    Then we determined the monthly amount and set that as our budget figure.


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