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.