Biweekly Amortization CalculatorUnderstanding how your mortgage works is very important to any plan that you may have to pay it off early. Many people enroll in a biweekly payment plan to ensure that additional payments are being made to their mortgage, while others do it on their own without enrolling in a plan. Either way, you should be using a biweekly amortization calculator to determine how and if you should make an investment in a biweekly payment schedule. A biweekly amortization calculator takes the amount of the principle of a loan, adds the annual interest and then calculates the savings that you will accrue if you make the decision to pay your mortgage on a biweekly basis. If you are wondering why a biweekly amortization calculator would show a savings it is simply because you will be making an additional payment per year, which will reduces the life of your loan approximately five to eight years. For those who do not understand how that is possible, the biweekly amortization calculator makes the assumption that if you are making biweekly payments, that the additional payment made each year is going towards the principle of the loan. Less principle means less interest to be paid. It is vitally important that if you choose to make the additional payment without the benefit of signing up for a biweekly payment program, that you instruct the bank each time an additional payment be made that the payment be made against the principle, not the interest. The nice thing about using a biweekly amortization calculator to determine your savings is actually seeing it up front. The biweekly amortization calculator will show you what you are currently paying to the bank in interest over the life of the loan if you are only making a monthly payment, and then the biweekly amortization calculator shows you what the savings will be if you pay biweekly. If you are still confused as to how a biweekly amortization calculator can show that you are saving money when you are still paying the mortgage, just in smaller increments, then you need to consider this. For your standard mortgage you pay twelve times per year, with a biweekly payment, you pay two times a week, no matter how many weeks are in a month. So, if you were to pay every two weeks for 52 weeks (52 divided by 2) then you would be making 26 half payments a year. That is one full payment more than if you made the monthly payment, thus the savings occur. |