When you purchase a home, your mortgage loan officer will tell you about your amortization schedule. This is the table that shows how much of your monthly mortgage payment goes towards the principle (your equity) and the interest (your bank). It is common to see a monthly amortization schedule showing your monthly mortgage payment. But did you know there could be another option that could ultimately save you money?

The other option is a bi weekly amortization schedule. Essentially this is paying half your mortgage payment every two weeks. You may think of this as splitting up your monthly payment into two equal parts, but after running some numbers, you will see that it is anything but that.

Let’s say that your mortgage payment is $1,000 per month. On a monthly amortization schedule, you would be paying $12,000 a year in mortgage payments. With a bi-weekly amortization schedule, you would pay $500 every two weeks; that seems obvious. However, this would entail $500 x 26 weeks which would come to $13,000 a year in mortgage payments; meaning more money towards principle (your equity). By paying on a bi-weekly basis, you can cut your 30 year note down by 5-8 years.

So while banks are eager to ensure you stay as a regular paying mortgage holder, contact your loan officer and ask them about a bi-weekly amortization schedule. Your inner frugal will thank you later.