Biweekly Payment Mortgage
Author: Terri Ewing
Published: July 30, 2008
Biweekly Payment Mortgage Defined
A bi-weekly payment mortgage is when the borrower breaks up their mortgage payment in half and pays it every two weeks instead of the whole payment just once a month. The benefit to this is at the end of the year, you have accumulated an additional mortgage payment.
When you give your lender that additional payment it equates to taking about 7 years off the life of your loan. Making extra mortgage payments is a wonderful idea. Anytime you can pay extra principal it saves you massive amounts of interest.
However, using a bi-weekly mortgage is a dumb way to do it. When you have a bi-weekly mortgage payment set up it is not with your lender. Your bi-weekly payments go through a company not affiliated with the lender servicing your mortgage. Anything can happen while this company is collecting and holding on to your mortgage payments for a year. What happens if they go under?
Also, these bi-weekly companies charge an upfront fee for this service. It’s just smarter to put this extra amount in your own savings account and make extra payments yourself. Where do you think your extra money sits while waiting for the end of the year? It sits in their bank account earning interest for them.
Author: Terri Ewing
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