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I found this to be interesting - it does not mean you are paying any more out a month, only that you pay 1/2 of your housepayment 2 weeks before it is due. Example if your housepayment is due on April 1, 2007, you make 1/2 of the payment on March 15, 2007 and the remainder on April 1, 2007 when it is due.
A bi-monthly mortgage with 24 payments eliminates (approx) 7.5 years from your mortgage, or 90 months. $1100 payment x 90 = $99,000 savings.
Can you believe that? We are currently working with a fiancial adviser and he told us this.
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Except some lenders have a fit about accepting partial payments. You can try it, especially if you don't mind making two payments a month, but you might hear from your lender about it.
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I have my house payment set up on automatic draft. It drafts every other Tuesday. It was offered by the company my loan is with. On the months with 5 Tuesdays I make 3 payments. Of course these are 1/2 the amount.
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Just be careful, as somebody else mentioned some lenders CHARGE you for this service. I think that is ridiculous. You can always budget it in yourself and it won't cost you a penny.
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I want to give this a try but Im scared! Dont ask why I just have a fear of letting my creditors debit my accout. automaticly . I hate to give up control
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This is an absolute brilliant idea. This is the only way I would ever pay my house note. Nowadays when I'm looking for a lender I have the mortgage set up this way and if they want to charge me a fee for it, I find another lender. If my mortgage was set up in the conventional way and my lender had a fit about me making partial payments, I would still find another lender. Bottom line: I would refinance if I had to. This is one of the few ways I know of to save thousands and thousands of dollars without doing hardly ANYTHING.
And 2littleladies, you don't HAVE to have your account automatically debited. You can send in two checks if you want to.
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Originally Posted by Cookie2
Except some lenders have a fit about accepting partial payments. You can try it, especially if you don't mind making two payments a month, but you might hear from your lender about it.
When i checked with my lender about doing this they wouldn't let me send in a partial pymt. They said it had to be a FULL one but i could send in " extra " and they would apply that to my loan. My sister who works in banking told me that actually by doing this it will help me pay off the balance quicker. Because it is like making extra house pymts a yr So i send in about 100.00 extra a month.
I still can't wait until we can change lenders- i hate the ones we have!!!! .
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I am not sure if this is correct but, I have heard that if you make one extra payment per year then it is the same as going bi-weekly payments. A friend told me to take my mortgage payment divide it by twelve and take that amount and add it to my payment amount every month. I always have the extra amount put towards the principle. Then you are making one extra payment per year. This way you are not charged any fees. Some banks make you pay closing costs to switch to bi-weekly payments. My Father used to send two checks to the bank and everytime they called to ask him why. Even with a note attached they never understood what he wanted to do with the money. Also any extra money you send in make sure it goes to the principle or sometimes they will put it towards the interest instead.
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Good point, Angel. Anytime you send EXTRA money, you must direct the bank to apply the extra to your PRINCIPAL, not the entire loan balance which includes the interest. This is why banks hate when we pay extra because they have to recalculate the amoritization schedule.
I've tried to re-fi to get away from a certain lender which has some policies that I hate. You probably know that mortgage company. It's the one with the covered wagon in their advertisements. Everytime I re-fi they end up buying our loan so I can't get away from them. We even re-fi'ed and instructed the mortgage company that our loan couldn't be transferred but they transferred us anyway.
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I checked with our lender on this and they have a plan that will take half of your payment and then the remainder later. BUT on this program they just hold the first half until they receive the 2nd half. That was no good!!! But they did tell me I could pay it myself either by mail or on line. I am going to check on this further because this will not mean I am paying any extra out of my pocket each year. It will be the same amount but in the end I will end up paying my house off earlier. Maybe I can even make an extra payment once a year. I did do some figuring on the extra charge and I am not sure it will apply if I am sending the payment in myself but if it does it means this:
I will make a total of 540 payments in 22.5 years. At $2.00 per payment the additional cost is $1,080. Bottom line, you will spend $1,080 to save $99,000. Is it worth it?
It aggravates me that they charge you a fee to do 24 payments. Corporate America nickels and dimes you to death. But, yes, in my opinion, it is worth it.