BiWeekly Loan Programs

A Biweekly payment plan, when available and affordable, is a highly recommended option that all homeowners should consider. This loan repayment strategy can save the borrower thousands of dollars, shorten the mortgage term and more quickly increase available equity.

The key element of the biweekly plan is that the borrower essentially pays an additional monthly payment every year. This additional payment is prepayment toward principal; it is not an advanced monthly (Principal & Interest) payment that was regularly scheduled.

With the biweekly plan, instead of one monthly payment, the borrower will pay half (1/2) of a monthly payment every two weeks. Of course, there are more than four weeks every month. Since there are 52 weeks in a year, the borrower ends up paying 13 months of payments each year—resulting in an additional full monthly payment every year:

  • 1/2 of a regular monthly payment every 2 weeks.
  • 52 weeks in a year.
  • 26 biweekly payments (52 / 2) in a year.
  • 26 biweekly payments equal 13 monthly payments (26/2 = 13).

This prepayment results in a marked decrease of the loan term, as demonstrated below. This prepayment also means that the borrower will pay much less in interest charges and will be increasing the equity in his or her home more quickly.

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What You Need to Know About Real Estate

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