A Financial Zen Member forwarded me an Instagram post and asked if the financial advice was “real”.
(Smart lady for trusting, but verifying.)
In the post, the self-ordained financial guru advises people to break up their mortgage payments into WEEKLY payments. (So the same total, but divided by 4.)
He explains that mortgage companies calculate mortgage interest daily.
So his reasoning is that the sooner you pay, the lower the principal balance and therefore the lower the interest charged…
…which is categorically FALSE.
Thanks for playing. Nice try. Don’t let the door hit ya…
Mortgage interest is calculated MONTHLY. You can send them a DAILY mortgage payment and it won’t make a difference.
(He likely got mixed up with credit card interest which IS calculated daily.)
Now, some lenders will let you change your payment frequency to bimonthly. In THAT case, the mortgage calculation also changes to bimonthly.
This can save you a little on interest over the life of the loan, but not a game-changing amount.
So be careful out there. Actually knowing anything isn’t a requirement to posting on social media.
If you’re reading this, then you should know you have a resource in me. Don’t hesitate to reach out to me whether your an FZ Member or just read my content.
