There is often some confusion about “interest rate” when people look at a biweekly mortgage program. While it’s true that a biweekly mortgage actually helps you build up your equity faster by paying down the principal quicker than normal mortgage repayment, it’s not true that it reduces the actual interest rate of your mortgage loan.

Lenders will very often offer a mortgage program forbearance plan as a first option to a delinquent or struggling borrower. They usually agree fairly quickly to allow you to forbear payments – this means that you do not have to make any payments for a specified period of time. The time frame varies depending on the type of loan you have – usually 6 months and 12 months for an FHA loan. The idea is to give you time to get back on your feet financially and then resume making the regular payments again. But what happens to those missed mortgage payments? The bad news is that they are not forgiven, and you still owe that money.

We do find that most people range in their 30s to 50s when starting these programs simply because one of the key advantages to these programs is helping people be able to retire on time or pay off their mortgage early so that they can more easily afford their children’s college tuition, or increase their rate of savings for retirement. If you have purchased your property or refinanced in the last few years that easily makes your loan eligible to be accelerated by a biweekly mortgage plan. Privately held mortgages or land contracts typically aren’t the best kind of mortgages to use in these programs.

Although there may be a minimal cost to do a biweekly mortgage program – starting one doesn’t involve any of the nasty third party fees that you typically see associated with a purchase or a refinance. There’s no survey required, no termite inspection required. There is not any type of appraisal or property evaluation required to do a bi-weekly mortgage program. There’s no title work, and no search for judgment or liens against you or your property to be able to have these programs in place for you.

In essence, the life of the loan would now be is 23.5 years (instead of the original 30) and since you’ve paid that loan off sooner and saved over $71,000 in interest payments, you’ve effectively only paid 5.2% interest rather than the 7% that was originally agreed upon on the original paperwork and contract between you and your lender. The actual note rate doesn’t change, but the effective amount of interest you payback on your loan is reduced due to the acceleration of the payments.

Learn more about Obama Mortgage Relief Plan Qualifications.