Submitted by Iwanttosee25 t3_zxbkj1 in personalfinance
I’m looking to change from monthly mortgage payments to weekly or biweekly and I’m trying to find a good amortization tool so I can input payment amounts and frequency to see the differences in interest paid over the life of the loan.
DeluxeXL t1_j1zbqhi wrote
It doesn't change interest or how soon you pay off if the payment amount per unit time is the same. Mortgages don't calculate interest constantly so it doesn't matter if you pay on 1/7/23, 1/14/23, 1/21/23, 1/28/23 instead of all on 2/1/23.
Lender simply expects the monthly bill paid by the due date. You can split required payment into multiple pieces on multiple days before the due date, or stay with one. If you pay extra, then the extra reduces principal for the subsequent monthly bills. Doesn't matter when inside the month you do it.
For example, if you split a $1000 bill into $250 pieces and pay weekly, then you'll be paying exactly as scheduled (not early, not late, and no extra payments) for most months. However, every year has 4 months with 5 weeks. In those 4 months with one extra week, the 5th payment is considered "extra payment applied to principal", reducing the duration of the mortgage.