Duplexes and the best Bi-Monthly payment.

There are 3 main multi-payment mortgage strategies for a property:

  1. The true bi-monthly mortgage payment.
  2. The bi-weekly mortgage payment.
  3. The additional payment over your payment book amount.

The true bi-monthly payment means that you pay half your mortgage amount at two points during the month. For example you may pay on the 1st and the 15th of the month. You are therefore making 24 payments per year. With this option you will accelerating your payment towards your principal but really its only shaving a small amount of total interest and number of payments from your term.

The bi-weekly payment means you pay half your mortgage amount every 2 weeks. You are paying 26 payments. With this option, again you are accelerating your payment towards your principle and you will see some real mortgage interest savings but you will also have the burden of getting two payments per month on time.

The additional payment over mortgage amount strategy is just the desire and ability to pay more on your mortgage each month against your balance. Be sure you state that the additional money is to go to principle rather than interest! The difference between this strategy and other two is that this option allows you pay extra whenever you want. The duplex scenario where you live on one side and rent out the other effectively gives you a extra payment per month to apply to the mortgage amount as desired. Even if you have a 30 year term, a certain amount over your base monthly mortgage would give you a payoff time line of 15 years for example. Duplexes have several financing advantages; one major one is the ability to generate cash flow that allows to pay off notes quicker.

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