Bi-weekly Mortgage

AAA

DEFINITION of 'Bi-weekly Mortgage'

A mortgage payment plan where payments are made every two weeks, as opposed to the more traditional monthly payment plan. Making mortgage payments every two weeks, as opposed to monthly, will result in the equivalent of one additional monthly payment being made each year. This extra payment is applied toward the principal balance of the mortgage, and will lead to substantial interest savings over the life of a long-term mortgage.

INVESTOPEDIA EXPLAINS 'Bi-weekly Mortgage'

When a bi-weekly payment plan is set up, most mortgage servicing companies simply hold the first half of the monthly payment until the second half arrives and then make the full monthly payment. If a simple interest bi-weekly mortgage plan can be set up, each payment received is immediately applied toward to principal balance of the mortgage leading to additional interest savings.

Converting an existing mortgage to a bi-weekly plan usually carries some fees. A self-disciplined borrower can gain the same benefits of a bi-weekly plan by making one additional mortgage payment each year, or by paying an extra amount each month equal to 1/12 of the scheduled monthly payment.

RELATED TERMS
  1. Compound Interest

    Interest calculated on the initial principal and also on the ...
  2. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  3. Graduated Payment Mortgage

    A type of fixed-rate mortgage in which the payment increases ...
  4. Accelerated Payments

    A term associated with making additional unscheduled payments ...
  5. Interest-Only Mortgage

    A type of mortgage in which the mortgagor is only required to ...
  6. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Credit & Loans

    How Mortgage Refinancing Affects Your Net Worth

    Find out how to determine whether refinancing will put you ahead or even more behind.
  2. Personal Finance

    Understanding Your Mortgage

    We walk through the steps needed to secure the best loan to finance the purchase of your home.
  3. Credit & Loans

    Understanding The Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  4. Credit & Loans

    Reverse Mortgages: How To Find A Good One

    Finding a reverse mortgage generally means using a lender that specializes in them. Here's how to find a reputable one.
  5. Stock Analysis

    How Are Interest Rates Affecting Annaly Cap Mgmt?

    Annaly Capital Management reported a net loss of $658 million thanks to the mortgage REIT's strategy of hedging its exposure to higher interest rates.
  6. Savings

    Mortgage Faceoff: Bank of America Vs. Wells Fargo

    Which bank offers the better mortgage deal? Here's how they compare on two popular types of mortgage.
  7. Credit & Loans

    How To Become a Mortgage-Backed Securities Analyst

    Specializing in structured or derivative credit products like mortgage-backed securities requires education and prior experience in the mortgage field.
  8. Investing

    3 Major Risks For Annaly’s Investors

    Thanks to its double-digit dividend yield, Annaly Capital Management has long been a favorite among income-seeking investors.
  9. Investing

    Ready To Invest In Financial Leverage Funds?

    Whenever you invest in a leveraged financial fund or are thinking about doing so, it's important to know the risks that could weigh on its returns.
  10. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.

You May Also Like

Hot Definitions
  1. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  2. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  3. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  5. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  6. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
Trading Center