What is a BI Weekly Mortgage and Who wants one?
By: Patrick Slouck | Posted: 03rd May 2006
The general rule of thumb is that if you make one additional mortgage payment each year, you will reduce a 30 year mortgage down to about 22 years. However, keep in mind that if you make these additional payments, you must advise your lender - both on your check and on their billing statement - that the additional amount is to be applied to the principal balance on your loan. Otherwise, some lenders will just keep those funds in a suspense account, and it will not be credited to your mortgage.
We recomend you use a pro. company for example http:www.americanmortgagereduction.com they have been in the bi weekly business for over 10 years and will answer any questions you may have. 888 551 5530 Patrick Slouck is the owner of the company.
Clearly, from the positive side, there is no question but that paying your mortgage twice a month will reduce your mortgage interest over the life of the loan. Keep in mind that if you make your payment once a month, every year you are making twelve mortgage payments. However, when you pay bi-weekly, you are also making one additional payment every year (52 -2 = 26 divided by 2 = 13).
Paying a mortgage on a bi-weekly basis does make sense, but it is not the only way to reduce your mortgage balance. You have to review your legal documents, promissory note and deed of trust to make sure that there is no pre-payment penalty associated with your loan. If there is no such penalty, you have the absolute right to make additional monthly payments, without having to be legally required to make a payment every two weeks.
Special thanks to Realty Times and Benny L. Kass for this content. Author of the weekly "Housing Counsel" column with The Washington Post for nearly 30 years, Benny Kass is the senior partner with the Washington, DC law firm of Kass & Skalet and a specialist in such real estate legal areas as commercial and residential financing, closings, foreclosures and workouts. Mr. Kass is a Charter Member of the College of Community Association Attorneys, and has written extensively about community association issues.
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Tags: rule of thumb, billing statement, mortgage payment, mortgage payments, mortgage interest, principal balance, promissory note, washington post, deed of trust, mortgage balance, 30 year mortgage, senior partner