Yale Roth M.A., M.Ed

The Biweekly Mortgage – How does it work?

Well, to start, there is no such thing as a biweekly mortgage.  All mortgages are amortized over a certain amount of time, where at the end of the mortgage term, the mortgage is satisfied.

So that means that you can’t secure a mortgage called a biweekly mortgage that debits your account every 2 weeks and applies that payment to your mortgage balance every 2 weeks.

There is, however, a biweekly mortgage payment system.

What the biweekly mortgage system does is take your monthly mortgage payment, multiply it by 12 and divide it by 26.

So if your mortgage payment is $1000 per month, the biweekly payment would be $461 every 2 weeks.  $1000 x 12 = 12,000/26 = $461.

Then the biweekly mortgage payment installment is debited from your account and held in an escrow account until the second installment (or third monthly installment) is received.

There are 2 months out of the year when the monthly installment is debited 3 times.  This just happens by virtue of the calendar.

At the end of the month, on a specified date, the installment is paid to the loan servicer.  Be clear that the installment is not sent to the servicer until the second monthly installment is received.

The servicing companies (who are the companies or banks who you write your mortgage payment to) are not equipped to take half a payment every 2 weeks.  If they receive a biweekly mortgage payment installment, they will return it to you as “insufficient.”

The biweekly payment system works automatically and regularly.  There are 2 “triple debit” months in the year so that means that if the biweekly mortgage payment is $500, you will be debited $1500.

If the monthly mortgage payment is $1000, the $1000 is paid and the $500 balance goes directly to mortgage principal reduction.

By paying additional money towards your mortgage principal balance, your mortgage will be paid off sooner, your net effective mortgage interest rate will drop, you’ll save thousands of dollars in mortgage interest not paid, and you’ll save thousands of dollars on the back end of the mortgage by not having a mortgage payment to make!

Take a look at my BiWeekly Mortgage Calculator to calculate your savings.

Related Posts:

• Biweekly Mortgage – Is The Biweekly Mortgage Payment System A Scam?
• How Does The BiWeekly Mortgage Plan Work?
• Why Prepaying Your Mortgage Loan Is A Good Alternative To Refinancing
• Does It Make Sense To PrePay Your Mortgage?
• New Video! “2 Minutes Of Your Time For 7 Years Off Your Mortgage”