Biweekly payment plans can help you pay off your mortgage faster and save interest over the life of your loan. By making one extra mortgage payment per year, you can reduce almost one third of the life of your mortgage loan and build home equity faster.

How it works:
A biweekly mortgage payment plan does not change the terms of your mortgage loan; it does change the frequency and amount of your payments. Because you will be paying 50% of your monthly mortgage payment every 2 weeks you will be making one extra mortgage payment per year which your servicer will credit to your principal balance.

Example:
If your current monthly mortgage payment is $800.00, divide that amount by two to obtain your new payment amount. The new payment amount will be $400.00 every other week. The result is twenty-six biweekly payments per year @ $400.00 totaling $10,400 being applied to your mortgage instead of twelve monthly mortgage payments @ $800.00 totaling $9,600. These additional payments are collected in the 2 months of the year that have 5 weeks and are typically remitted to your servicer as a full monthly payment plus a principal curtailment of one half of a monthly payment. By reducing your principal balance you are reducing the amount of interest owe over the term of the mortgage loan.

Using the example above, if you paid an extra payment of $800.00 per year on your own and had it applied to principal, you would achieve nearly the same result.

There are fees involved with these types of programs, normally a one-time setup fee and possibly a monthly service fee. It is best to contact your lender regarding the available program options and the amount of fees that are required.