Question:

What is the difference between bimonthly and biweekly mortgage programs?

Answer:

Difference between bimonthly and biweekly mortgage programs exists, even if many people use the terms wrongly.

Biweekly mortgage programs require that you pay half of your monthly payment every two weeks. Thus, at the end of the year additional monthly mortgage payment applies to the principal and greatly reduces your debt.

Bimonthly mortgage programs differ from bi-weekly programs in that your monthly payment split in two applies to your loan twice a month - the effect here comes from reducing principal more often and interest is accrued on lesser amount. Sometimes a bimonthly plan refers to making mortgage payments once every two months, but this is not a common use of the term.

Biweekly mortgage programs can be very effective, but costly to switch to. Enrollment in a biweekly mortgage program may cost as much as $400. Usually, if someone wants to charge you that much to simply enroll you into a biweekly loan program, either find another service provider, or commit to setting funds aside yourself. However, the benefits of biweekly payments are so huge that the setup fee should not bother you if you could afford it.

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