There are various government-backed refinance programs that are designed to make the home-purchasing process easier for Americans. These programs are ai...More
For the loan amount of $250,000.00, with interest calculated at a rate of 5% and compounded Monthly, over 30 years (plus a federal tax rate of 22% and a state tax rate of 5%), you will save approximately 4 Years 7 Months by switching to bi-weekly payments. Your bi-weekly payment will be $671.03, versus a standard monthly payment of $1,342.05. This means you will save $42,856.89 in interest payments. You will experience a higher tax savings of $62,947.65 with a standard payment than you will with a tax savings of $51,376.30 with a bi-weekly payment, which results in a tax savings loss of $11,571.36. The net result is a total benefit of $31,285.53.
Total benefit is $31,285.53 and is positive, you will save more in the long run by using bi-weekly payments. This is due to the fact that you are paying more each month and shortening your mortgage length, which cuts down on your interest payments.