- Biweekly Mortgage
A Biweekly Mortgage is a payment plan where the
borrower makes payments toward his principal andinterest every two weeks instead of once monthly. The Biweekly payment is exactly one half of the amount a monthly payment would be. The savings a Biweekly Mortgage payment plan creates are often astounding, though they can be misleading.A 30-year mortgage of $200,000 at 6.5% will require a monthly payment of $1,264.14. When this mortgage is converted to a Biweekly Mortgage payment plan, the payment will be $632.07 paid every two weeks. Paying the mortgage this way will result in the mortgage being paid off nearly 6 years sooner and it will result in a savings of $58,747.11.
The key to a Biweekly Mortgage plan is that instead of making 12 full payments each year, you make 26 half payments or 13 full payments each year. This is because there are 26 2-week periods each year. Because of this, some months require 3 payments or 1 and one half traditional payments.
Many real estate experts argue that keeping an existing monthly payment mortgage and making one extra payment each year will result in the same savings as a Biweekly Mortgage payment plan would. They also argue that some mortgage companies charge large amounts of service fees to convert a mortgage to a Biweekly payment plan, and this may constitute an indecorous business practice on behalf of these mortgage companies.
External links
* [http://articles.edlathrop.com/biweekly_mortgage.htm The Biweekly Mortgage Scam]
* [http://articles.edlathrop.com/biweekly_plan.htm Saving Money With Biweekly Payment Plans]
* [http://www.azcalc.com/calc-biweeklypayment.php Calculate How Much You Can Save With Biweekly Mortgage Payments]
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