Finance
In Montana, a 'bi-weekly mortgage payment' program allows a borrower to:
AMake two payments per month at half the monthly amount, resulting in 26 half-payments (equivalent to 13 full payments) per year and faster principal paydown✓ Correct
BPay only twice a year in large lump sums
CReduce their interest rate automatically after 6 months
DSkip payments during summer months
Explanation
Bi-weekly mortgage payments result in 26 half-payments per year (52 weeks / 2), which equals 13 full monthly payments instead of the standard 12. This extra payment each year significantly reduces the loan term and total interest paid.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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