Biweekly Mortgage

A Biweekly mortgage is a mortgage loan payment plan where the borrower makes payments toward his/her principal and interest 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.

Most lenders do not offer an actual biweekly payment program and rely on 3rd party processors. This is due to the fact that they would be accepting partial payments from the consumer. This is the reason why lenders rely on 3rd party companies to process their biweekly mortgage programs. Although there are some fees involved, the biweekly programs available for enrollment online can still save you tens of thousands of dollars on a mortgage and shave off years off the loan. Some of the biweekly payment processors do not charge any up-front fees and deduct their fee from the actual savings/extra payment made by following the biweekly pattern.

Some 3rd party processors offer biweekly payments on almost any loan and not limited to a biweekly mortgage alone. A biweekly payment in the automotive world has been becoming increasingly popular.

Read more about Biweekly Mortgage:  Criticism

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