What is the typical result of making biweekly mortgage payments?

What is the typical result of making biweekly mortgage payments?

• A. Longer payoff period
• B. Equivalent of one extra monthly payment each year
• C. Lower principal amount
• D. Fixed monthly payments

Answer: (B)

When making biweekly mortgage payments, the typical result is that you end up making the equivalent of one extra monthly payment each year. This happens because biweekly payments mean that instead of making 12 monthly payments per year, you make 26 half-payments. When you calculate that, 26 half-payments equal 13 full monthly payments. By making this extra payment, you can significantly reduce the overall interest you will pay over the life of the loan and shorten the loan term. This strategy accelerates equity growth in the property as well. This effect is particularly beneficial for borrowers who are looking to pay off their loans more quickly and save on interest payments. The other options focus on different aspects of mortgage structuring, but they do not capture the significant financial impact that biweekly payments provide, which is the additional payment made annually.

When making biweekly mortgage payments, the typical result is that you end up making the equivalent of one extra monthly payment each year. This happens because biweekly payments mean that instead of making 12 monthly payments per year, you make 26 half-payments. When you calculate that, 26 half-payments equal 13 full monthly payments.

By making this extra payment, you can significantly reduce the overall interest you will pay over the life of the loan and shorten the loan term. This strategy accelerates equity growth in the property as well. This effect is particularly beneficial for borrowers who are looking to pay off their loans more quickly and save on interest payments.

The other options focus on different aspects of mortgage structuring, but they do not capture the significant financial impact that biweekly payments provide, which is the additional payment made annually.