# Mortgage question

Ok, whoever knows the answer please don’t spoil it for others. Question: It is said that if you make your mortgage payments bi-weekly as oppose to monthly you can shorten your mortgage duration by up to 7 years. How is it possible?

you will be paying less interest on o/s mortgage balance but I doubt if it will shorten the duration by 7 years. Not sure is this what you are expecting or is this some kind of riddle.

wow

Interest accrues daily. So if you make 2 payments rather than 1, you’ll ditch some of the interest that would have otherwise accrued. I read this in Automatic Millionaire, there was some math illustration behind it.

I think it is the timing issue. Paying monthly, there is total of 12 payments in a year. However, if you pay bi-weekly, I think you end up paying 13.5 payments in a year (54weeks/4=13.5). Therefore, it can shorten your motgage life. By how much, I have to sit down and do the math.

Yeah, I’ve seen the math. It is 7 years.

ws Wrote: ------------------------------------------------------- > I think it is the timing issue. Paying monthly, > there is total of 12 payments in a year. However, > if you pay bi-weekly, I think you end up paying > 13.5 payments in a year (54weeks/4=13.5). > Therefore, it can shorten your motgage life. By > how much, I have to sit down and do the math. year has 52 weeks.

^sorry1 52weeks/2=13 payments.

mwvt9 Wrote: ------------------------------------------------------- > wow exactly. You learn this in all lthe evels and it is just a year and some of us already forgot.

pupdawg82 Wrote: ------------------------------------------------------- > you will be paying less interest on o/s mortgage > balance but I doubt if it will shorten the > duration by 7 years. > > Not sure is this what you are expecting or is this > some kind of riddle. That’s my initial reaction too.

52X2/12=8.67, but interest has to be factored into it.

comp_sci_kid Wrote: ------------------------------------------------------- > Ok, whoever knows the answer please don’t spoil it > for others. > > Question: It is said that if you make your > mortgage payments bi-weekly as oppose to monthly > you can shorten your mortgage duration by up to 7 > years. How is it possible? Would a lender let you do this without prepayment penalty? Are biweekly payment schedules typical?

Isn’t this a question for Lewie Ranieri? or Gutfreund?..those “big swinging d!cks” ?Correct me if I am wrong.

Say if you got a biweekly paycheck and you could invest your money efficiently (like automatic out of your paycheck), and your rate of return was greater than your mortgage rate, the opportunity cost of the TVM would not make this worthwhile.

ws Wrote: ------------------------------------------------------- > I think it is the timing issue. Paying monthly, > there is total of 12 payments in a year. However, > if you pay bi-weekly, I think you end up paying > 13.5 payments in a year (54weeks/4=13.5). > Therefore, it can shorten your motgage life. By > how much, I have to sit down and do the math. correct

^What do I win??

nothing, you think there are 54 weeks in a year.

Why make any mortgage payments? Just let your responsible neighbors make them for you.

I_Passed_Level_1 Wrote: ------------------------------------------------------- > nothing, you think there are 54 weeks in a year. Because I keep think the number of weeks in a year is the same as number of cards in a deck (I keep including the jokers)