A mortgage in which you make payments every two weeks instead of once a month.
The basic result is that instead
of making twelve monthly payments during the year, you make thirteen.
The extra payment reduces the principal,
substantially reducing the time it takes to pay off a thirty year mortgage.
Note: there are independent companies
that encourage you to set up bi-weekly payment schedules with them on your thirty year mortgage.
They charge a
set-up fee and a transfer fee for every payment.
Your funds are deposited into a trust account from which your
monthly payment is then made, and the excess funds then remain in the trust account until enough has accrued to
make the additional payment which will then be paid to reduce your principle.
You could save money by doing the
same thing yourself, plus you have to have faith that once you transfer money to them that they will actually
transfer your funds to your lender.
Real Estate Glossary:
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