It is my understanding that biweekly payments that are applied to your loan reduce your principal 2 weeks before your monthly payment could lead to a shorter duration for the money owed. Please correct me if I am wrong.
- Now, if the servicer doesn't allow partial payments and holds on to the partial (half) payment until the full amount is received, would it be possible to get the same amount of savings as a biweekly payment through other means? What's the math behind the alternative(s)?
I can think of paying an extra amount at the beginning of the year but is paying an extra payment amount at the beginning of the year better or the same than biweekly payments?
I have heard that paying 1/12th extra in each payment would be the same but I don't see how the math would help (because you owe a bigger amount each time a payment is due) unless I misunderstood the biweekly payments approach.
Is there a reason why servicers aren't forced to do this by law? I see biweekly payments as a way to help the consumer.