Comments on: Paying Your Mortgage Biweekly

By: Christine

Christine — Wed, 29 Apr 2009 00:09:31 +0000

BEWARE of the Accelerator Programs! After refinancing in Nov.08, I thought I was arranging an accelerator mortgage program with BoA. Very interesting scam. First, I paid a month ahead of time in order to allow each additional payment to be applied the day it was deducted from my account. Four months later, I have now learned that despite the fact that BoA have systematically withdrawn weekly payments as well as principal only payments early, they were not applied until the first of the month, hence they had my money while I received no benefit!

By: JOHN

JOHN — Tue, 01 Jan 2008 18:55:50 +0000

many have posted messages stating they haven’t heard from a 3rd party, just their lender. I was looking into bi-weekly payments and called the number on my gmac statement, and the guy asked who my loan was through….turns out the number I called was an agency contracted by gmac and many other lenders….after hearing about the one time $49 sign up fee and the $9 a month processing fee, I then called gmac directly and asked to speak to someone in reference to setting up a bi-weekly payment plan, I was then transferred to the same agency…. this is just info. for any of you who think you may be setting up a bi weekly plan with your lender, you’re probably not, like I said, the first number I called was actually on my gmac statement regarding payment options…

By: Jeffrey Rhodes

Jeffrey Rhodes — Tue, 04 Dec 2007 20:14:24 +0000

Paying off your mortgage faster, saving thousands of $$$$ is great….
There is more to consider:
1) Banks have options-They can apply an extra payment to any part of
the loan. By Law “Under the borrowsers right to Pre-Pay” any time you
submit in an extra payment, in writing you are to inform the bank where
to apply the extra money. If you do not you are a sitting DUCK!!!!!
Question to ask yourself did they apply my money correctly; and how
much interest did I really save with that transaction??????
2) Who will do an audit for you? Remember you do not get any notice
of how much interest you save, or if the bank apply your money
the right way….
3) Educate yourself fully before you go any direction, trust me what you do
not know will cost you in INTEREST!!!!!!!!!!

By: Steven James

Steven James — Fri, 08 Dec 2006 08:22:21 +0000

Well, I have not recieved any offers by a third party company. But my current mortgage company sends me offers about this. They charge $25 as a set up fee which i think is completely insane. Can you help me out ? Well, bills.com warned me about some of the 'Deadly Mortgage Mistakes' and therefore, i am a bit extra careful while shopping for a mortgage now.

By: fivecentnickel.com

fivecentnickel.com — Thu, 07 Dec 2006 01:09:23 +0000

Weekly Roundup – 12/01/06

Here’s a quick look at some of the articles that caught my eye over the past week…
JLP has a list of tax-related records that you should plan on holding onto.
MBH talks a bit about taking the risk out of your year-end FSA activities.
Jim provides s…

By: Berry Enloe

Berry Enloe — Wed, 06 Dec 2006 10:37:19 +0000

Please don’t pay for this service! If you are going to do it do it yourself. Do make sure they pay principle with it and not either future interest payments or escrow.

Here are a couple of considerations:
1. Before you pay extra have six months worth of mortgage payments saved up. If you run out of income it does not matter how many extra payments you have made in the past they will still want your next payment as soon as it’s due… they don’t carry them forward like they do with some car loans.

2. The earlier you start paying extra the more it helps you… thats because you are paying off more of your principle and so you have less outstanding that you owe interest on. Later on in your loan you owe less so would save less.

3. IF YOU ITEMIZE- you need to consider the tax savings and savings return in your decision… if your mortgage is at 6.5% and you can get 5% in a CD then you may not want to pay towards the mortgage early… that cash can be used for opportunities or emergencies that arise later without costing you any money.

By: Damon Clinkscales

Damon Clinkscales — Mon, 04 Dec 2006 00:27:51 +0000

Unfortunately, just sending in an extra payment each month may not work. Sometimes mortgage companies will send the check back to you (or misapply it), claiming they don’t know what to do with it. This sucks, but apparently just the way banks behave.

I agree it is a ripoff to have to pay $350 for these services that automate extra payments, however once you’ve paid that fee, it is a very convenient way to shave 7 years off a 30-year. Fortunately, you can also simulate the same effect by making one extra mortgage payment each year. Just make sure you contact your mortgage company to ensure that they apply it properly.

By: mbhunter

mbhunter — Sun, 03 Dec 2006 05:14:08 +0000

They asked you to refinance again because they figured you had so much fun doing it the first time!

By: Landlord Shmandlord

Landlord Shmandlord — Sat, 02 Dec 2006 05:03:57 +0000

As you can see in the trackback below (which updated incredibly fast), I read your article and started to write a comment, but it ended up turning into a blog post.

Please check it out:

http://www.landlordshmandlord.com/2006/12/01/how-beneficial-is-it-to-make-extra-mortgage-payments-each-year/

BTW, I really like the site = )

By: Steve

Steve — Fri, 01 Dec 2006 10:22:44 +0000

It is amazing how many years that can be wiped off the payment of a mortgage by paying bi0weekly.

By: Mike

Mike — Thu, 30 Nov 2006 18:00:30 +0000

I’m in 100% agreement that these biweekly “deals” are a ripoff, if I wanted to pay more towards my mortgage or pay it more frequently I would just do it, I shouldn’t have to (and I think in most cases don’t have to) pay extra for setup or payment. It’s easy to understand why they do it though, it costs them little or nothing to process the additional payments and therefore whatever extra money they can get you to pay for these extra “services” is pure profit. Many people would never think of doing this on their own, so by packaging it up as a “service” and charging for it, they can make it sound like a great deal even though they’re charging you for something that in essence you can already do for free.

The exceptions here might be mortgages that have policies where they would simply hold your payment until the due date and then apply it, even though you sent it in early. That’s kind of a shady practice in my opinion, but if your mortgage works that way, then taking their deal might be the only way to get a biweekly program to work. In that situation, a better alternative is probably to just add a bit to your normal payment, it will have the same general effect and should work with any mortgage that doesn’t have prepayment penalties (and even some that do), and you won’t have to pay any additional fees.

Regarding the refinancing offers, I think it’s simple direct marketing principles in action. I read somewhere that even though it’s counterintuitive, the most effective time to send a direct marketing letter to someone is right after they bought a similar product/service. Logically you would think that if you just bought vitamins, you would be less likely to buy more than someone who hadn’t just made that purchase, but if you actually test that idea the opposite is true. The same principle is probably being applied to your refinance.

Another factor in mortgage refi is simply how they generate their leads. When you get a new mortgage or refinance, it’s public record. Mortgage lenders who do direct marketing get their leads from this information, that’s why they are able to personalize their letters with your current lender and/or loan amount. So when they pull the next batch of new loans, they add you to their mailing list, and you start getting letters.

By: Jessie

Jessie — Thu, 30 Nov 2006 17:19:47 +0000

I have not seen or recieved any offers by a third party company. But my current mortgage company sends me offers about this. They charge $15 a payment to set it up, which is completely insane. I recently started adding the extra payment amount into my normal monthly payment toward principal, which works out the same too.

By: Curtis

Curtis — Thu, 30 Nov 2006 17:06:54 +0000

I got one of these letters recently as well. I don’t remember all the offer details, or even if it was from my mortgage company or a 3rd party, but after seeing the fees (”low” annual fee of hundreds of $ plus a startup fee) I tossed it.

I _have_ been meaning to switch from a monthly to semi-monthly payment schedule to match my direct deposits, but I keep forgetting to do it.

By: John

John — Thu, 30 Nov 2006 16:23:19 +0000

Let’s also not forget that the interest savings using this method are pretty miniscule during the first decade or so of a fixed mortgage. If your cash flow can handle the extra payment a year, why not add it to savings instead?

By: Sun

Sun — Thu, 30 Nov 2006 16:12:59 +0000

My mortgage is with Countrywide and I have an ARM. However, when I tried to use their service to pay my mortgage biweekly instead of monthly, I was told that this option is not available for ARM. I am not sure if this is a general rule of Countrywide specific. Paying the bill every two weeks can definitely save some interests, but if you already pay additional principles on top of what you have to pay, then it’s not that helpful, in my opinion.