Bi-Weekly Mortgage Vs Standard Mortgages
All home owners know about the traditional 30 years standard mortgage loan. The newer concept of biweekly mortgage has triggered a series of argue as to which one is superior to the other. For us to understand the complexity of how these mortgages work and which one is more advantageous than the other we need to analyze the basics of each kind of mortgages.
The traditional mortgage has been there for a long time. The lenders loans the principal amount on the mortgaged character and the borrower is expected to pay the loan amount along with interest as monthly installment for a specific amount of years. The standard loans vary from 10, 15, 20 to 30 years depending on the principal amount and the credit history of the borrower. It goes without saying that the borrower usually ends up paying more than the principal amount by the end of the loan term.
Bi-weekly mortgage is a newer concept; this is gaining immense popularity among many people as they believe that this is the easiest way to pay back their mortgage. The mortgage working is fairly simple the lender loans the principal amount on the mortgaged character. Unlike the traditional mortgage, the borrower pays half as much every two weeks. In a whole year, there are 52 weeks. As a consequence there will be two months a year when the home owners can make three payments instead of two. As a whole, per annum there will be 13 monthly payments made. Since the payment is bi weekly and the amount comparatively low, home owners firmly believe that this is the most painless way to pay off their mortgage loan. The most important advantage of bi-weekly mortgage is that it allows home owners to pay off the mortgage faster, and also since the principal loan amount is paid much more rapidly than the traditional loan home owners can save a lot of money by the end of the mortgage period.
On the outset, the bi-weekly mortgage definitely looks better than traditional loans. However, there are many aspects the home owners fail to recognize before they decide to opt for a bi-weekly mortgage plan. The first and foremost thing is the upfront fee which most money lenders expect the home owners to pay in order to avail the bi-weekly mortgage plan. Before opting for bi-weekly mortgage plan it is always advisable to consult a mortgage broker who can give you complete details on how these loans function. It is also necessary for the home owners to ask about the various upfront fees that have to be paid in order to avail bi-weekly mortgage loan.