What is the difference between accelerated bi weekly and biweekly

With a non-accelerated or regular payment plan, the Lender takes 12 months worth of payments and divides this by either 26 or 52 to come up with the bi-weekly or weekly payment. With this adjusted payment the Lender still receives a stream of income of 12 months payments per year, so there is no additional principal available to accelerate the amortization. But what about the fact that the Lender is still getting the money sooner with a regular bi-weekly payment than with a monthly payment?

Does this not impact the amortization? As a matter of fact, yes it does shorten the amortization, but the impact is so small that paying a 25 year amortization mortgage with regular bi-weekly pay- ments shortens the amortization to 24 years, 10 months.

In comparison, a rapid bi-weekly payment plan would reduce this same loan amortization to approximately 16 years, 8 months. For a rapid bi-weekly payment, they take your monthly payment and simply divide it in half. You will notice that over a year that is equal to just five cents more than a regular monthly payment. When the year is done on a rapid payment you have paid equal to 13 months payments over a 12 month period.

So when all is said and done simply by changing from a monthly or regular bi-weekly payment to a rapid or accelerated bi-weekly payment not only did you just save yourself three years of mortgage payments. Mortgage payments work the same way. When you do bi-weekly payments there will be two months of the year that you will have three payments come out for your mortgage.

These months will change each year depending on the payment dates you pick. If bi-weekly options are not something that works for you, most mortgages will let you increase your monthly payments. All you would have to do to make your monthly payment equal to the rapid bi-weekly is add the difference to the monthly mortgage.

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