Question
A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The loan will be $200,000 at 6 percent interest for
A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The loan will be $200,000 at 6 percent interest for 20 years. How would you analyze these alternatives?
Bi-weekly payments means the loan is still amortized over the full-term, but payments are made 26 times a year at half the normally amortized rate (in effect, the borrow is making a full extra payment for each year of the loan which will lead to a shorter term until payoff). Remember to divide the annual interest rate by 26 for the bi-weekly calculation. Please show work in Excel.
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