Do-it-yourself mortgage savings

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Editor's note: The original version of this column contained mathematical errors in the sample calculation on payment of interest vs. principal reduction. We apologize for the errors. The article has been updated to delete these erroneous calculations.

DEAR BENNY: My lender just sent me a form notice suggesting that I can save a lot of money if I start making two mortgage payments each and every month. Does this make sense? --Jill

DEAR JILL: There is a trade-off on what is called a "biweekly" mortgage. Yes, you will save paying a lot of interest, but, depending on your tax bracket, your interest deductions will also be reduced.

Let's take this example: You borrow $200,000 at 4.75 percent for 30 years. From the amortization table, you know that your monthly payment (excluding taxes and insurance) is $1,043. If you continue to pay this amount each and every month, on the 360th month you will have paid off your mortgage comp...