In a bi-weekly mortgage payment plan, how many extra monthly payments are made each year?

In a bi-weekly mortgage payment plan, how many extra monthly payments are made each year?

• A. 1
• B. 2
• C. 3
• D. 4

Answer: (A)

In a bi-weekly mortgage payment plan, borrowers make payments every two weeks instead of once a month. Because there are 52 weeks in a year, this results in 26 bi-weekly payments made over the course of the year. When payments are made bi-weekly, effectively, this translates into 13 full monthly payments since 26 bi-weekly payments divided by 2 gives 13. Typically, borrowers are accustomed to making only 12 monthly payments in a year. Therefore, the additional payment made in a bi-weekly plan results in one extra monthly payment compared to a standard monthly payment plan. This extra amount contributes to reducing the principal balance of the loan more quickly, which can lead to savings on interest over the life of the loan and shortens the term of the mortgage.

In a bi-weekly mortgage payment plan, borrowers make payments every two weeks instead of once a month. Because there are 52 weeks in a year, this results in 26 bi-weekly payments made over the course of the year.

When payments are made bi-weekly, effectively, this translates into 13 full monthly payments since 26 bi-weekly payments divided by 2 gives 13. Typically, borrowers are accustomed to making only 12 monthly payments in a year. Therefore, the additional payment made in a bi-weekly plan results in one extra monthly payment compared to a standard monthly payment plan.

This extra amount contributes to reducing the principal balance of the loan more quickly, which can lead to savings on interest over the life of the loan and shortens the term of the mortgage.