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    Mortgages

    Accelerated Bi-Weekly Payments

    Quick Definition

    A payment schedule that adds roughly one extra monthly payment per year.

    Full Explanation

    With accelerated bi-weekly payments, you pay half your monthly mortgage payment every two weeks. Because there are 26 bi-weekly periods, you make the equivalent of 13 monthly payments a year, which can cut several years off a 25-year amortization.

    Related Terms

    Amortization

    The total length of time to pay off a loan through scheduled payments.

    Mortgage

    A secured loan used to purchase real estate, with the property as collateral.

    Prepayment Privilege

    The right to make extra mortgage payments without penalty, typically 10–20% of original amount annually.

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