Paying your mortgage with less pain

A co-worker and I were talking a few weeks ago about mortgage payments when we discovered that we had the same mortgage company. Several years ago, I had made the jump over to weekly payments. I’ve been doing this for many years now. She has a young family and like many of us, lives paycheck to paycheck. This topic came up again when she told me she had to call the mortgage company to work out a plan when she couldn’t pay her mortgage at all this month (her husband’s work hours were cut recently).

When I paid a monthly mortage payment, we felt broke constantly. Half the month we had no money because the mortgage payment was due. Depending on what day of the week the first fell, we didn’t always have the money in the bank and paid it a week late, sometimes more (using most of the 16 day grace period we were allowed). In order to change over to weekly payments, our mortage had to be current (this was a struggle since we were often paying on the 5th, which techically was past due). We also needed to have about half our mortgage payment on hand, because the weekly payments would start coming out immediately. This again was a struggle. It seems the easiest time to do this is after a nice tax refund or sale of a large item.

The beneifts of weekly payments: My husband and I both work and each of our payments is enough to cover the weekly payment, this means that one check (or about 2/3 of one) goes to the mortgage, the other check goes to other expenses. Budgeting is so much easier when the bills are staggered out. Our vehicle insurance is due the first week of the month, vehicle payment the second week, (another vehicle recently paid off was due the third week), and health insurance and fuel oil budget payments are paid from the fourth. This has allowed us to control the flow of our expenses much better and their is no longer a two week span of being completely broke.

Depending on your mortgage company, you may also pay down your mortgage faster. Some weekly payment plans apply the payment immediately upon receipt (ours unfortunately does not, holding the partial payments until the first of the month when they’re applied as a full payment). The later will not give you the early payment like the first. Some plans are also a 48 week plan where there are no additional payments, mine is a 52 week plan where we make the equivalent of one full payment to paydown principal. We refinanced our loan in November 2006. According to our mortgage company, we’ve already reduced our 15 year mortgage by 4 months by participating in the weekly payment plan. We hope to have it paid off several years early.

For us, the real benefit was paying the mortgage without feeling the constant struggle to balance everything. We pay many of our bills by automatic draft (I only recommend this if you know you’ll have a consistent amount of money in your account every week or you’ll face a lot of high bank fees .. ours are $40 per overdraft). I highly recommend contacting your mortgage company to see if they offer a weekly plan if you feel you could benefit like we did.