How to Get a Biweekly Mortgage
What it is
| At a Glance | |
|---|---|
| Loan Type: | Mortgage |
| Lender: | Bank |
| Secured: | Yes |
A biweekly mortgage is designed to save homeowners money and take years off of the term of a mortgage. With a regular mortgage, a homeowner makes 12 mortgage payments in a year. Since there are 52 weeks in a year, a biweekly mortgage equals 26 half payments a year. The equivalent would be making 13 mortgage payments a year instead of 12. By applying that extra payment directly to the loan balance as a principal reduction, your loan amortizes more quickly, requiring fewer payments.
Biweekly mortgages come with different interest rates and terms. The biweekly descriptor refers to the payment schedule only. There are many types of mortgages available on a biweekly schedule, including variable rate mortgages, fixed rate mortgages, balloon mortgages and many others. The biweekly payment schedule allows people to budget more effectively, pay off their mortgages sooner, save money on interest, have more flexibility financially, as well as other benefits.
Who it's for
Typically, mortgages are made with interest rates between five and 10 percent with terms of 25 years or more. This type of mortgage is affordable to many people because of the long length of the term that makes the biweekly payments smaller. Biweekly mortgages are also more affordable to many people because they can make two smaller payments in a month instead of one larger payment. This is convenient for many people who are paid on a biweekly schedule.
What you need to do to apply
In order to obtain a biweekly mortgage, interested applicants will need to contact a local lending institution and inquire about the different options and rates available. Personal and financial history, including a credit report, will need to be made available to the lending institution. A property appraisal may also be required.