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From: msc@saber.UUCP (Mark Callow)
Newsgroups: net.consumers
Subject: Re: Semi-monthly mortgage repayments
Message-ID: <1871@saber.UUCP>
Date: Mon, 18-Nov-85 18:40:29 EST
Article-I.D.: saber.1871
Posted: Mon Nov 18 18:40:29 1985
Date-Received: Wed, 20-Nov-85 00:53:39 EST
References: <10961@ucbvax.BERKELEY.EDU> <4555@alice.UUCP>
Organization: Saber Technology, San Jose, CA
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From: ark@alice.UucP (Andrew Koenig)
> If you pay twice a month instead of once, and your payments are
> half what they would be otherwise, you pay off the loan in half
> the time (believe it or not)!  So the number above should have
> been 15 years, not 12.

I don't believe it.  I got out my handy-dandy TI business analyst
and worked out the numbers for my own mortgage.  I divided my payment
by two and divided the monthly interest by 2 (i.e. increased the
compunding period to twice a month.)  I then calculated the number
of payments required to pay off the loan.  The answer?  718 payments.
Dividing by 2 to get the number of months, we get 359 or just
one month less than 30 years.  Yup, that's all the time you save; just
one month.

The real answer, as someone else said, is that they want you to make
biweekly payments so you are actually making the equivalent of 13 payments
a year.
-- 
From the TARDIS of Mark Callow
msc@saber.UUCP,  sun!saber!msc@decwrl.dec.com
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