Thursday, November 21, 2024

Scott Bilker
Household Math™: Is biweekly better?
by Scott Bilker
 
Scott Bilker is the author of the best-selling books, Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. He's also the founder of DebtSmart.com. More about and DebtSmart can be found in the online media kit.

Test your knowledge by trying to solve this DebtSmart, Household Math™ problem! After you complete the problem, you’ll get the solution and explanation.
 
1. Here are two mortgages: (Loan 1) Standard mortgage for $166,792 at 6% for 30 years with monthly payments of $1,000.00 or (Loan 2) A biweekly mortgage for $166,792 at 6.1% for 25 years with biweekly payments (once every two weeks) of $500. Which mortgage is better? (Note: There are no prepayment penalties for either loan. Meaning that you can pay as much as you wish, at anytime, without penalty.)
Loan 1 (standard) because the interest rate is lower.
Loan 2 (biweekly) because you pay off the same amount 5 years earlier
Both are the same because this is a trick question
I don't know!



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