Bimonthly Mortgage

Bimonthly Mortgage

A mortgage on which half the monthly payment is paid twice a month.

It should be called a “semi-monthly mortgage” but market practice often trumps logic. In contrast to a biweekly, a bimonthly mortgage involves no extra payments. The 24 half payments a year add to the same total as 12 full payments. Advancing the payment by half a month saves a little interest, but the effect is negligible. A 7% 30- year loan pays off in 29 years, 11 months. Check it out with the bimonthly spreadsheet on my Web site.

The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.