What does the concept of accelerated bi-weekly payments involve?

The concept of accelerated bi-weekly payments involves taking the monthly mortgage payment and dividing it by two, enabling the borrower to make a payment every two weeks instead of monthly. This approach results in making 26 payments a year (as there are 52 weeks in a year), which is effectively equivalent to making 13 monthly payments instead of the standard 12.

This method accelerates the repayment of the mortgage by applying more frequent payments towards the principal, reducing the total interest paid over the life of the loan and allowing the loan to be paid off faster. It helps borrowers build equity in their homes more quickly and can significantly decrease the overall cost of borrowing.

Other options do not accurately describe the accelerated bi-weekly payment method. Simply dividing the total loan amount by the number of payments fails to consider how payment frequency impacts interest accumulation and principal reduction. Calculating interest on an accelerated basis doesn't pertain to the specific mechanics of payment frequency. Finally, making payments only once a month contradicts the very nature of bi-weekly payments.