Weekly mortgage payments can be a convenient way for homeowners to pay off their mortgage faster, but they may come with additional fees and can be difficult to manage in the event of a sudden job loss or illness. Homeowners should carefully consider the costs and benefits before agreeing to a weekly payment arrangement.
While most mortgages require a payment to be submitted once every calendar month, there are other payment alternatives that may be of interest to homeowners. One of these alternative approaches is the weekly mortgage payment. Instead of 12 monthly payments per calendar year, the owner makes a series of 52 payments over the course of that year. There are benefits as well as some drawbacks associated with weekly mortgage payments, with the ability to pay more than the outstanding balance per year on the one hand, and the difficulty of managing those frequent payments on the other.
One of the main attractions of the weekly mortgage payment has to do with arranging payments in a way that is most convenient for homeowners who receive weekly paychecks. Instead of having to save money over the course of the month to meet the larger monthly payment, the smaller weekly payments make it possible to consistently pay off a little more of the mortgage balance without leaving a little money each week. Some consumers find that smaller but more frequent payments are simply easier to manage and can be structured to coincide with the weekly payment date.
Another advantage of the weekly payment mortgage is the ability to pay off more of the outstanding mortgage balance throughout the year. The series of weekly payments effectively adds another four weeks of payments applied to that balance than a standard monthly payment would allow. In theory, this means the homeowner is paying off the mortgage faster, possibly cutting a few years off the overall mortgage term and saving money in interest on the loan.
While a weekly mortgage payment may be helpful for some consumers, others may find the approach not as viable as a monthly payment approach. Some lenders will charge additional processing fees to manage the costs of more frequent payments. Those extra fees can offset the value of making weekly rather than monthly payments, which means the cumulative effect over the course of a calendar year is that mortgage balances aren’t reduced much.
Also, the weekly mortgage payment approach can be difficult to manage in the event of a sudden job loss. The frequency of late payments leaves little time to make alternative financial arrangements. In the same way, an illness that prevents an hourly worker from earning money for a couple of weeks could mean late payments and late fees only exacerbate the problem.
Before agreeing to a weekly mortgage payment arrangement, homeowners should take a close look at any costs associated with this payment structure and compare the amount of debt that is taken out annually compared to the more conventional monthly payment schedule. Consideration should also be given to what action the lender is likely to take if the homeowner is out of work for several weeks, both in terms of fees assessed each week a payment is missed, and how many payments may be late before the lender chooses to initiate proceedings. of foreclosure. Only after determining that the weekly mortgage payment schedule provides enough benefits to outweigh the potential drawbacks, should the homeowner accept the agreement and structure the mortgage with a weekly payment obligation.
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