Most brokers, lenders, analysts and non-mortgage product providers find customer demand for biweekly mortgages is still strong. The biweekly mortgage marketplace has grown to serve a wide range of customers. Originally, the tool was targeted at borrowers who had good credit, but not a lot of discretionary income at the end of the pay period. People who live paycheck-to-paycheck are not necessarily subprime, but they are good prospects for this type of loan program. 

What biweekly mortgage programs offer consumers is the ability to save money over the long term combined with the convenience of having their payment automatically deducted from their checking account. Every other week, money is taken out of the customer's checking account - a convenience customers appreciate as much as the simplicity of the process and savings in the long term. Once the customer's account has a full month's mortgage payment accrued, the mortgage payment is made. This way, by having 26 half payments debited per year, the homeowner ends up making an additional full mortgage payment every year.

By making an additional mortgage payment every year, homeowners can shave several years off the term of their mortgage loan. The extra yearly payment could bring down a mortgage borrower's loan term by as much as seven to 10 years. A mortgage borrower can sign up for this service at anytime during the term of the mortgage loan. There is a simple enrollment form. The advantage of signing up for such a program, other than the cost saving, is that once the program is set up it's "worry free" and the customer doesn't have to worry about scheduling. And while customers could save the service fee by administering the payments themselves, only 3% of homeowners prepay their mortgages without setting up these sort of prepayment programs.

Borrowers do not have to be doing the biweekly program from day one of their payments. They can sign up anytime in the process, although the financial benefits are reduced if it is not done from the start. They are also not bound to the program if they decide it is not for them. They can cancel at any time. Most people find the biweekly program beneficial because it is more in tune with how they get paid... the main theory is you match the biweekly debit with the borrower's paycheck, since a lot of people get paid every two weeks. This serves to smooth out the borrower's cash flow. New technology has taken that a step further. The ability to set up automatic bank drafts has added another level of safety. When this is configured properly, payments are made like clockwork and the borrower need not worry about keeping track of the mortgage.

A lot more people are catching on to the idea of how the product really saves you interest over the lifetime of the loan. It definitely benefits the client. Long-term benefits depend on the size and other loan characteristics. Most importantly, under the program customers can really knock off some interest payments, just by breaking down the payment and ultimately save a few thousand dollars in interest for the life of a 30-year loan.

Biweekly mortgages programs that provide greater flexibility for borrowers and greater default management capabilities are getting more popular. As rates continue to edge up, growth in biweekly programs could spike.