How Biweekly Payment Plans are Beneficial When Refinancing Your Mortgage
Refinancing your mortgage is a way to reduce your monthly payments, but what if you could do more? What if you could pay off your mortgage years ahead of schedule and enjoy a host of other benefits after refinancing? With an accelerated biweekly payment plan, this is made possible. Read on to learn about how switching to biweekly payments is a smart choice after refinancing your mortgage loan.
The Time Reset Problem With Refinancing
Typically, when you refinance your mortgage, you’re changing the terms and interest rate with the goal of achieving a lower monthly payment. However, when you refinance, your loan term usually resets. For example, if you’ve been paying on a 30-year mortgage loan for four years, and then choose to refinance, your mortgage will reset back to 30 years. This means you effectively lose the four years that you’ve already been paying, and instead of only having to pay on the loan for the next 26 years, you’ll have to pay for the next 30. So, you’ve just turned your 30-year mortgage into a 34-year mortgage. This could potentially result in you paying less toward the principal over that time and more toward the cost associated with borrowing money.
Accelerate Your Loan Payoff
The good news is that by enrolling in an automated payment plan with AutoPayPlus, you could pay off your 30-year mortgage up to 6-7 years earlier. Depending on how many years you have already paid on the loan, this means you could not only recover the years you lost to refinancing but also gain back a little extra time. With biweekly payments, you’ll pay more toward your mortgage each year, reducing the principal faster and reducing the number of payments you’ll have to make on the back end. As the principal you owe decreases, the amount of interest that can be charged to the principal also decreases, ultimately accelerating your loan payoff and reducing the total cost of borrowing.
Gain Equity in Your Home
With an accelerated biweekly payment plan with AutoPayPlus, you pay more toward your principal, even after you’ve refinanced your loan. As a result, you’re gradually building equity in your home. The amount of equity you have in your home through accelerated biweekly payments builds quicker than with standard monthly payments, meaning you’ll own more of your home in less time. This could position you to take advantage of opportunities like a home equity loan or other line of credit in the future.
Simplify Your Payment Management
One of the biggest challenges of keeping up with a mortgage is managing the monthly payments. It’s possible to find yourself falling behind and incurring hefty late fees. That’s mainly the reason why homeowners choose to refinance with the hopes of yielding lower monthly payments. Along with accelerating your loan payoff comes a simplified way of managing your payments, helping you avoid falling behind. Biweekly payments make it easier for you to stay on track by aligning your mortgage payments with your paycheck schedule. By setting up a personalized automatic payment plan, you can enjoy the convenience and peace of mind of knowing that you’re making on-time payments and steadily paying down your mortgage.
Other Benefits of a Biweekly Payment Plan With AutoPayPlus
Aside from accelerating your mortgage payoff and simplifying your payments, setting up a biweekly payment plan through AutoPayPlus means you enjoy additional advantages to help you manage your finances, including:
- TransUnion credit reporting and monitoring to help you stay on top of your credit score and receive reports directly from the TransUnion credit bureau.
- Avoiding late payment fees by setting you up with an automatic payment schedule on the day of your choice.
- A six-month open enrollment period that allows you to add additional loans to your payment plan with no extra enrollment fees.
Refinancing your mortgage loan is a major step in securing your financial future. By setting up biweekly payments with AutoPayPlus, you can pay off your loan sooner and simplify the way you manage your payments. Visit our website to learn more about how our accelerated mortgage payment program works.
