What does bi weekly payments mean

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You should consult your own attorney or seek specific advice from a legal professional regarding any legal issues. Please understand that Experian policies change over time. If you wonder how it works, just check out this article. Just like the name itself, bi-weekly means paying your employees every two weeks.

You can choose any weekday to be a pay date. Once chosen, this day will be a set day. It can be Monday, Wednesday, or Friday. For example, if you want to pay on Friday, then every other Friday in a month, you will pay for your employees.

Because of this, every year, there are two months when you receive three checks. A bi-monthly or semi-monthly pay means paying twice a month.

Frequently, the pay dates are 15 days apart. The two pad dates can be on the first and the 15th every month, however, you can freely choose your own schedule.

In other words, the payments might not be applied every two weeks to the loan. However, the biweekly mortgage sent in monthly would still help the borrower pay one extra payment per calendar year.

Some lenders and mortgage companies charge a fee to establish a biweekly mortgage to help make up for the lost interest due to the borrower paying the loan off earlier. Also, a biweekly mortgage is a firm commitment to make a payment every two weeks. It cannot be changed from month-to-month.

As a result, borrowers need to determine whether they can commit to the additional payments and consider how often they're paid by their employers as well as their other monthly bills. A biweekly mortgage is not the same thing as a bi-monthly mortgage. The bi-monthly structure requires two payments per month, which comes out to 24 payments per year. Since a biweekly payment plan does not adhere strictly to a monthly calendar, it involves 26 payments per year.

The two extra payments per year due to the biweekly mortgage is better than the bi-monthly mortgage if the goal is to save interest and pay off the loan sooner.

A disciplined borrower looking to enjoy the benefits of a biweekly mortgage without the added fees can structure their own payments to mimic the plan.

The borrower can make payments every two weeks, and if the mortgage company applies the payments immediately, the borrower gets the interest savings. The borrower can also divide their monthly mortgage payment by 12, and set that amount aside each month for a year. At the end of the year, they can take the total amount saved and make an extra payment to further reap the benefits of the biweekly mortgage. Under a traditional mortgage, each monthly payment is composed of some interest and some principal.

Early in the loan, payments are largely comprised of interest, but the principal portion amount increases over the life of the loan. All along, interest calculations are based on the assumption of 12 monthly payments per year.

When a borrower sends in an additional 13th payment, most lenders will devote the entire payment to the principal, hastening the payoff horizon of the loan. TJ Porter. TJ Porter is a contributing writer for Bankrate. TJ writes about a range of subjects, from budgeting tips to bank account reviews.

Edited By Suzanne De Vita. Edited by. Suzanne De Vita. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Share this page. Bankrate Logo Why you can trust Bankrate. Bankrate Logo Editorial Integrity. Key Principles We value your trust. Bankrate Logo Insurance Disclosure.

How do biweekly mortgage payments work? Read more From TJ. You may also like How a mortgage broker can save you time and money. USDA home loans: What you need to know.

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