Finance
A bi-weekly mortgage payment plan accelerates payoff because:
AThe interest rate is reduced with bi-weekly payments
B26 bi-weekly payments per year equal 13 monthly payments instead of 12, applying one extra payment annually to principal✓ Correct
CThe monthly payment amount is larger than in a standard plan
DThe lender waives the origination fee for bi-weekly plans
Explanation
A bi-weekly mortgage plan makes half the monthly payment every two weeks. Since there are 52 weeks in a year, this results in 26 half-payments = 13 full payments annually instead of 12. The extra payment reduces the principal faster, shortening the loan term.
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