What Are the Pros and Cons of a Weekly Mortgage Payment?

While most mortgages call for remitting a payment once each calendar month, there are other payment alternatives that may be of interest to homeowners. One of these alternative approaches is the weekly mortgage payment. Rather than 12 monthly payments per calendar year, the homeowner renders a series of 52 payments over the course of that year. There are benefits as well as some drawbacks associated with weekly mortgage payments, with the ability to pay off more of the outstanding balance per year on the one hand, and the difficulty of managing such frequent payments on the other.

One major attraction of the weekly mortgage payment has to do with arranging payments in a manner that is more convenient for homeowners who receive weekly paychecks. Rather than having to save money over the course of the month to meet the larger monthly installment, the smaller weekly payments make it possible to constantly settle a little more of the mortgage balance while still having a little money left over each week. Some consumers find that the smaller but more frequent payments are simply easier to manage, and can be structured to coincide with the weekly pay date.

Another bonus of the weekly payment mortgage is the ability to settle more of the outstanding mortgage balance over the course of the year. The series of weekly payments effectively adds another four weeks of payments applied to that balance than a standard monthly payment would allow. In theory, this means the owner is paying off the mortgage faster, possibly shaving a few years off the overall mortgage term and saving money on the interest applied to the loan.

While a weekly mortgage payment may be helpful for some consumers, others may find the approach is not as viable as a monthly payment approach. Some lenders will charge additional processing fees to manage the costs of the more frequent payments. Those additional charges can offset the value derived from making weekly as opposed to monthly payments, meaning that the cumulative effect over the course of a calendar year is that the mortgage balances is not reduced to any great degree.

In addition, the weekly mortgage payment approach can be somewhat difficult to manage in the event of a sudden job loss. The frequency of the payments coming due leaves little time to make alternative financial arrangements. In like manner, an illness that prevents an hourly worker from earning money for a couple of weeks could mean falling in arrears and being assessed late fees that only compound the problem.

Before agreeing to a weekly mortgage payment arrangement, homeowners should look closely at any costs associated with this payment structure, and compare how much debt is retired annually in comparison to the more conventional monthly payment schedule. Consideration should also be given to what actions the lender is likely to take if the owner is out of work for several weeks, both in terms of fees assessed each week that a payment is missed, and how many payments may be delayed before the lender chooses to begin foreclosure proceedings. Only after determining that the weekly mortgage payment schedule does provide enough benefits to offset potential disadvantages should the owner agree to the arrangement and structure the mortgage with a weekly payment obligation.