Should I consider bimonthly amortization of my mortgage?
Answer:What is referred to as a bimonthly amortization, is often a biweekly amortization. You make a payment every two weeks, interest is accrued on the first part of the payment, and when the second payment arrives, the lender credits the amount towards the mortgage. In result, you might be saving cash.
Biweekly compared to bimonthly amortization results in covering 13 monthly payments with 26 biweekly amortization payments.
Sometimes, a bimonthly amortization is read differently - either as once every two months, or once every two weeks. Biweekly and bimonthly amortization are often confused and used as synonyms.
Although there are regular bimonthly amortization programs (that is, payment is made once every two months), this type of loan amortization has no effect whatsoever on shortening the mortgage term. Biweekly and bimonthly amortization programs are designed as additional features to a mortgage and a lender may ask you for a fee to convert your mortgage to a bimonthly amortization plan. However, often the lender will apply your payments as if you were making regular monthly mortgage payments and the supposedly incurred benefit will not exist at all.
Our advice: Be sure to ask your lender about FHA loans. FHA loans have very competitive interest rates because the loans are insured by the US Federal Government. Even if you have had serious credit problems, such as bankruptcy, it is easier to qualify for an FHA loan than a conventional loan. Also, taking an FIXED rate loan while the interest rates are still low is a smart idea. Check your eligibility here:
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Common misspellings: mortage and morgage