Simple Interest Bi-Weekly Mortgage

AAA

DEFINITION of 'Simple Interest Bi-Weekly Mortgage'

A bi-weekly mortgage payment plan in which the payments made by the borrower are applied immediately toward the remaining principal balance of the mortgage as they are received. This differs from a traditional bi-weekly plan, where the first payment received during a month is held by the servicer of the mortgage until the second payment for that month is received; only then is the sum of the two payments is applied toward the remaining principal balance of the mortgage.

INVESTOPEDIA EXPLAINS 'Simple Interest Bi-Weekly Mortgage'

A simple interest bi-weekly mortgage plan creates greater interest savings than a bi-weekly plan where two payments are first received before any amount is applied toward the remaining principal balance of the mortgage. Under a simple interest bi-weekly plan, when the first payment is immediately applied toward the principal balance, interest is no longer charged on that part of the principal balance as it would have been had the payment been held until the second payment in the month arrives.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Conforming Loan

    A mortgage that is equal to or less than the dollar amount established ...
  3. Conventional Mortgage

    A type of mortgage in which the underlying terms and conditions ...
  4. Bi-Monthly Mortgage

    A mortgage plan where half the scheduled monthly payment is made ...
  5. Simple-Interest Mortgage

    A mortgage where interest is calculated on a daily basis, as ...
  6. Forbearance

    A temporary postponement of mortgage payments.
Related Articles
  1. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  2. Tax Deductions On Mortgage Interest
    Taxes

    Tax Deductions On Mortgage Interest

  3. Understanding The Mortgage Payment Structure
    Credit & Loans

    Understanding The Mortgage Payment Structure

  4. How Our Borrowing Habits Have Changed ...
    Credit & Loans

    How Our Borrowing Habits Have Changed ...

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center