The typical bi-weekly mortgage plan can not only shorten the terms of your mortgage loan, it can dramatically reduce the effective interest rate you pay. What does this mean?

If you have a 30 year mortgage and your rate of interest is 7.5% annually, using a bi-weekly payment plan reduces the principle balance of your loan much faster. The result is, the amount of Interest you pay is reduced accordingly. As a result you could easily take a 7.5% rate and the effective interest you would pay could be equal to 6.15% without ever refinancing. So, if you have a 6% rate of Interest, your bi-weekly payment plan can reduce the effective Interest rate to 4.875%.

So, before considering refinancing for the sake of an Interest rate reduction, take a look at the benefits of a bi-weekly payment plan. It offers you a very viable alternative for financial planning purposes.

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