Bi-weekly Mortgage Payments

I have no first hand experience with these programs, but advice I've received about paying extra to set up the twice monthly payment is : don't do it. If you want the benefit without the cost you can make an extra payment each year (one payment toward principle) and the result is the same. It does take more discipline to do this, but then you aren't paying more to someone else, so financially you come out ahead.

I have a bi weekly set up with Nationwide. They charge a one time fee and you never have to pay it again even if you sell this house anad move to a different house they will not charge you again. Also they will set you up on more than one mortgage at a time and not charge extra. I have been happy with them considering they were going to save me thousands of dollars over the coarse of the loan.

I would never pay for that kind of program. I would call my mortgage company and make sure extra payments wouldn't give me a fee and then just do it on my own for free. Maybe with the money you save you can make another extra payment!! :)

I honestly don't see the point in this option unless you have a hard time budgeting & managing your money? In that sense it would work. My only incentive for switching to this method would be to have lower payments. If that's the problem I think you'd be better off doing a refinance. Just some food for thought.

You can check with the better business bureau to see if they are a legit business maybe or if they have any complaints against them??

Good Luck - C.

Make sure that your mortgage company will accept bi-weekly payments because some won't! Ours wouldn't accept them and started applying the partial payment to the principal only and still expecting a full payment once a month! I started subtracting half the payment amount from my checkbook every other week and then set up a bill pay to send them a check for the full amount every four weeks. This made us ahead on our payments as well as paying down some additional principal since I rounded the payment up. Good luck!

Exactly what JC said...

Look at it this way: If you "sign up" for the program that makes the payment due every two weeks you get that many more chances for your payment to be late. And then charged a late fee. With bi-weekly you are also playing interest + principle, not making an extra payment for the principle only.

If you leave it as a traditional due on the 1st, late on the 15th program you can make one extra payment once per year and specify on the check that its FOR PRINCIPLE ONLY. Then they apply the money to principle and not to interest.

Take your mortgage payment amount X 12. Divide the total by 26 and you'll get how much you should be 'paying' if you're going bi weekly. Sock away the difference to get that extra payment by the end of the year. Or put it into a Roth IRA.

Bi-weekly payments can be good to lower the amount you pay on interest and the extra payment ever 6 months is good too. But it isn't worth it if the fees you pay to the company are more than what you'd be saving or if they end up being dishonest, taking your money without paying to th mortgage company.
Your bank might not have a program set up, but is there any reason you couldn't do it anyway? Just take the monthly payment and divide it in half. You'll have to make the first payment 2 weeks before the full amount is do, so that you'll be paying the second half before it's due. Ask the bank if there's any reason why you can't do it that way.

There are benefits to making two payments each month, however if your bank does not offer it then I would not go through an outside company. It will only cost you more in the long run and that is not typically the goal to making two payments each month. Use your extra money to send more money each month and make sure you let the mortgager know that you want it to go to the principal.

Good luck to you.

Very easy take your payment amount for example 984.72 and divide by 2 which gets you 492.36 than either
a) mail a check for that amount, pay that amount using check by phone, or online depending on how the payments are set up every two weeks
b) place that amount in a seperate account (put an extra 5 so you don't go too long to have money back in the account when you make a payment) and make your mortgage payment from that account once a month placing the extra money on the principle (make sure you designate that the extra goes to principle) in the months that there are 3 bi weekly payments
c) put the money in seperate account but just pay the regular amount each month than once a year send in an extra payment marked to principle only.

Before doing any of these make sure your mortgage lender will allow you to pay extra to the principle or pay off the loan early. There are some out there that access a penalty for doing so.

If you do one of the 3 methodes I described you can still get the bi weekly payment idea and the extra payment a year but you are not paying any fees.

I have done a little bit of reading on this subject and often times with a company done program by the time you pay the set up fee and the service fee the actual amount you end up paying towards the extra payment each year amounts to less than half. If you do go with a company ran biweekly mortgage program be sure and read the fine print and add up all the payments. I would recommend taking your monthly payment times 12 and times 13 than on the payment x 13 subtract out all the different fees and see how much more your saving.
If you wanted another really low tech way to do it divide your monthly payment by 12 and add that amount to your payment indicating it to interest. Using my example numbers its 82.06 so you would make your payment for 1066.78 each month indicating the extra to principle only.
Why pay someone else to do what you can do yourself.

T.

A friend of mine says they have done this for the past three years. When they put their house up for sale this year they realized that it didn't do them a bit of good. Their mortgage hadn't gone down... their payoff amount wasn't any less. I don't know anything about the program but I believe you have to do/participate long term to get any benefit. If you plan on being there 15 to 20 years and having your 30 year loan paid off in that amount of time look at it long term. If this house is a transition house don't do it.

Hi K.,
My husband owns a mortgage company. He can give you some advice about the disadvantages/advantages of doing a bi-weekly payment. If you would like to contact him, here is his contact information: Brian Crowder, Crowder Mortgage, cell ###-###-####.

K.,

Many companies charge a fee for this service. Instead of using a service, you can divide your payment by 12 and add that payment each month to your mortgage payment, or write a separate check with "principal pre-payment" in the memo line.

What we do is just add $100/month to our payment, and that ends up being about a payment a year.

Also--if you are paid biweekly, and that is why you want to do the biweekly payments, I found that if I made my budget based upon two paychecks a month, there were two times a year where you have an "extra" check that can go to savings, debt repayment, the mortgage, a vacation, Christmas gifts, etc.... and that was a really nice thing to have twice a year! I miss that now that we are paid bimonthly. Good luck with figuring out how to do this.

I agree with the moms who have suggested that you not do this. As I understand it there is generally a fee involved. Why would you pay someone for the privilege of paying your mortgage? Just send in extra money each month to total an extra payment and I imagine you will come out ahead.

There is usually a fee to sigh up for this and you pay for this program every time you make a payment. You can make a extra payment totally to interest and you will save more and not be paying someone to tell you to pay more. It evens out to about 2 payments a years.
Dave Ramsey says to do it yourself also. You can get a book from him or listen to him on the radio,and he has lots of good information.
I actually signed up for a company called Ufirst. It costs $3500 to help you pay off your house in about 1/2 the time. (Dave Ramsey doesn't agree to spend money to get out of debt.) It teaches you how to use credit cards and a home equity line to pay off your mortgage much quicker. It is pretty interesting. It is a systematic way to balance your home equity line and credit cards with your mortgage and use the free 30 day interest to your benefit.
Now I would buy the system, but because I already have it I will use it. You can use the concept on your own.:)

Hi Kim,
My advice would be simply to make additional payment(s) to your principle payment each month. You can usually set that up online with your bank/mortgage lender and sometimes that's not even necessary. Simply begin making the additional payments to your loan when you write out your check. You can add as much or as little as you'd like and that in turn will decrease the amount you owe long term. That way you are not stuck paying a certain amount every two weeks, trusting someone else with your personal information or writing an extra check. This will also help if you have a shortfall at some point you are not obligated to make that additional payment. There are numerous places online to find a mortgage calculator (CNN, Money Magazine for example)that will help you figure out how much additional amounts added to your principle each month will knock down your payments at the end of the loan. Notice I said put the extra money down on the principle not interest or escrow. You want to lower that principle amount as quickly as possible so you will lower the amount you borrowed. Blessings, L.

I don't know anything about Nationwide Biweekly Admin, but my husband and I do this through our mortgage company and have saved tons of money in interest in just the 6 years we've owned our home. We didn't pay a fee to sign up. The bank divided our regular monthly payment so instead of paying once at the end of the month we pay half twice a month, so we're not paying anymore out of pocket than we would have and will save loads of money in interest over the course of the loan. We also set up auto pay on our mortgage so we never have to worry about late fees.

there is a fee to set up bi-weekly mortgage payments & its not cheap. All you have to do is make one extra principal payment per year all on your own. Then you can have the piece of mind that you dont have to trust a company, especially with companies going under in this economy.

I would only do this through your mortgage company, any others don't sound legit.
BTW.we do this and really love it, its not so much money at one time and we don't even notice the extra payment...but only do this through your mortgage company...

Don't have a service do this for you - you'll end up paying fees for something you could do yourself! Either just pay a little more than the minimum each month and it will do the same thing, and save you the fees. Good luck!
S.

I would not use a service either. However, I do recommend paying your mortgage down more quickly by either paying bi-weekly or paying a bit extra each month if you can. We do the latter. I pay my mortgage online using auto-pay each month, and I just add an extra 100 or so towards the principal. Sometimes more, sometimes less/none (my income fluctuates). I can change the amount easily online when I need to. Admittedly, I get paid monthly, so it makes more sense for us to do it this way instead of bi-monthly, but you could always set up the extra savings account like someone else mentioned, put your half the mortgage there (plus an extra $20 - $50) and pay your mortgage from that account when it comes due.

When we first bought our house I received letters offering a service like this. I was interested at first until I read all of the fine print. The offers I received had a fee. The way they save you money is you will make 26 total payments a year so you will basically be making a full extra payment each year. I decided not to sign up for this service because I figured if I wanted to make an extra payment each year I would do so on my own without paying anyone any fees. The fees you would be saving by not using this service could be applied to your payments. If I were you I would not use this service.

I think you can do this yourself, even if you are technically only paying once a month. I wouldn't use a random junk mail ad. Also, never give them your bank account info. If you decide that this is the way you want to do it, set up bill pay with your bank...that way, you are in charge.