Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.3 alpha 5/22/85; site cbosgd.UUCP Path: utzoo!watmath!clyde!cbosgd!mark From: mark@cbosgd.UUCP (Mark Horton) Newsgroups: net.consumers Subject: Re: Semi-monthly mortgage repayments Message-ID: <1609@cbosgd.UUCP> Date: Wed, 13-Nov-85 13:57:29 EST Article-I.D.: cbosgd.1609 Posted: Wed Nov 13 13:57:29 1985 Date-Received: Thu, 14-Nov-85 07:23:46 EST References: <1389@decwrl.UUCP> <10961@ucbvax.BERKELEY.EDU> Organization: AT&T Bell Laboratories, Columbus, Oh Lines: 13 When I first saw this, the claim was that the bank having the extra half payment for half the month was what was cutting down on the interest. But this doesn't make any sense because if you were to just prepay half a payment extra when you took out the loan, it would give the bank that same amount of money all the time instead of half the time, and obviously it would just apply to the principle and make almost no difference. Finally I read something in the Sunday paper that explained it. It isn't a semi-monthly payment, it's a bi-weekly payment. Since there are 52 weeks in a year, you in effect make 13 months worth of payments every year instead of 12. This extra payment is what is bringing down the mortgage that much more quickly.