What is the accelerated bi-weekly payment amount for a $385,000 mortgage at 4.45% over 15 years?

To determine the accelerated bi-weekly payment amount for a mortgage, it's essential to know the principal amount, the interest rate, and the term length. In this instance, the mortgage is for $385,000 at an interest rate of 4.45% over 15 years.

The calculation involves first determining the monthly mortgage payment using the standard loan payment formula, which takes the principal, interest rate, and the total number of payments into account. For a mortgage calculated using monthly payments, the interest rate must be converted to a monthly format, and the number of payments must be calculated based on the 15-year term.

Once you have the monthly payment amount, converting it to accelerated bi-weekly payments involves multiplying the monthly payment by 12 to determine the annual total and then dividing by 26 (the number of bi-weekly periods in a year).

The choice that states $1,150.72 accurately reflects the calculated accelerated bi-weekly payment, indicating that when payments are made bi-weekly instead of monthly, the borrower pays down the principal faster, ultimately reducing the amount of interest paid over the life of the loan.

Understanding this calculation is crucial for borrowers to grasp how accelerated payments can significantly affect their overall mortgage cost and repayment timeline.