Bi-Weekly Mortgages. What’s it all about?
When you use a bi-weekly payment plan you pay only half of your monthly mortgage payment every 2 weeks, instead of the full amount once a month. This will result in you paying off your mortgage loan faster which will likewise result in a lower overall interest costs to you. For example, the bi-weekly mortgage payment process can pay off a $200,000 thirty year fixed loan at 7% in approximately 24 years (75 months sooner than a standard payment plan), with a total interest savings of approximately $68,925.
Will my lender do this for me? The answer to this question is that I do not know, as it really depends on whether or not your lender offers the service. However I do advise that anyone considering switching to a bi-weekly mortgage pay-off plan follow a few simple guide lines. First of all be leery of lenders that continuously try to get you to convert to there own bi-weekly mortgage pay off plan. Why? Because it doesn't take a rocket scientist to figure out that no lender (in their right mind) who stands to loose thousands of dollars in interest payments (if you switch to a bi-weekly mortgage pay off plan) will ever beg you to convert. If they do, you can rest assured that they have figured out a way to make a profit off of your conversion.
There are at least three (for a lack of better words) bi-weekly pay scams that I know of today that some of these lenders are using. For instance, some of them offer the bi-weekly payment service to their customers just to keep ahead of their competitors. They than charge there customers a rather large set up fee for the conversion of there payment plan. Then there's the lenders that offer the service under a carefully worded advertisement which allows them to collect your payments under the umbrella of a bi-weekly payment schedule but in actuality they only apply your payment to your account once a month. This latter set up is not a bi-weekly payment plan at all.
Another maneuver that I recently discovered is practiced by a well known big name in the mortgage loan industry. They offer a supposedly quarterly payment plan called the pay52 plan. This plan withdraws 1/4th of your mortgage payment from your bank every week. It gives you the impression that they are applying this amount each week to your mortgage loan balance. It appears that this lender just sits on your mortgage payment (earning interest for them) until they collect your whole mortgage amount and only then apply it to your mortgage.
Nevertheless there are some mortgage companies that DO actually collect your payment and pay it right away, but most of them play games like the one I just described.
So what can you do to leverage the tables when considering a bi-weekly mortgage pay plan? I suggest a third party provider. Yup there are third party organizations that provide this service for homebuyers. So why do I favor third party originations that offer bi-weekly payment services over lenders that offer the service. For starters there is no conflict of interest. That is eliminated from the start. Secondly some of them offer a very beneficial service that tracks your savings and audits your loan to find lender mistakes which occur about 50% of the time according to the F.D.I.C. Also note that most of these companies collect your payments via an automatic debit and submits your payments (on time to your lender)with no hassle to you. Now do be advised that most of these third party organizations do charge a small set-up and monthly processing fee. However there are some companies out their that offer the service for absolutely no charge. However even with these free service companies there is usually a small monthly electronic processing fee of about
5-6 dollars which is automatically deducted from your account each month. So in essence you are not getting the service 100% free. Nevertheless as far as I am concerned a measly 5-6 bucks per month combined with the tremendous amount of money that I save by using a legitimate biweekly pay service makes the program about 99.9% free.
And that my friend is indeed free enough for me.
The biweekly mortgage service provider that I use have a very informative website with contact info at:
//www.biweeklymortgagehelp.com
Will my lender do this for me? The answer to this question is that I do not know, as it really depends on whether or not your lender offers the service. However I do advise that anyone considering switching to a bi-weekly mortgage pay-off plan follow a few simple guide lines. First of all be leery of lenders that continuously try to get you to convert to there own bi-weekly mortgage pay off plan. Why? Because it doesn't take a rocket scientist to figure out that no lender (in their right mind) who stands to loose thousands of dollars in interest payments (if you switch to a bi-weekly mortgage pay off plan) will ever beg you to convert. If they do, you can rest assured that they have figured out a way to make a profit off of your conversion.
There are at least three (for a lack of better words) bi-weekly pay scams that I know of today that some of these lenders are using. For instance, some of them offer the bi-weekly payment service to their customers just to keep ahead of their competitors. They than charge there customers a rather large set up fee for the conversion of there payment plan. Then there's the lenders that offer the service under a carefully worded advertisement which allows them to collect your payments under the umbrella of a bi-weekly payment schedule but in actuality they only apply your payment to your account once a month. This latter set up is not a bi-weekly payment plan at all.
Another maneuver that I recently discovered is practiced by a well known big name in the mortgage loan industry. They offer a supposedly quarterly payment plan called the pay52 plan. This plan withdraws 1/4th of your mortgage payment from your bank every week. It gives you the impression that they are applying this amount each week to your mortgage loan balance. It appears that this lender just sits on your mortgage payment (earning interest for them) until they collect your whole mortgage amount and only then apply it to your mortgage.
Nevertheless there are some mortgage companies that DO actually collect your payment and pay it right away, but most of them play games like the one I just described.
So what can you do to leverage the tables when considering a bi-weekly mortgage pay plan? I suggest a third party provider. Yup there are third party organizations that provide this service for homebuyers. So why do I favor third party originations that offer bi-weekly payment services over lenders that offer the service. For starters there is no conflict of interest. That is eliminated from the start. Secondly some of them offer a very beneficial service that tracks your savings and audits your loan to find lender mistakes which occur about 50% of the time according to the F.D.I.C. Also note that most of these companies collect your payments via an automatic debit and submits your payments (on time to your lender)with no hassle to you. Now do be advised that most of these third party organizations do charge a small set-up and monthly processing fee. However there are some companies out their that offer the service for absolutely no charge. However even with these free service companies there is usually a small monthly electronic processing fee of about
5-6 dollars which is automatically deducted from your account each month. So in essence you are not getting the service 100% free. Nevertheless as far as I am concerned a measly 5-6 bucks per month combined with the tremendous amount of money that I save by using a legitimate biweekly pay service makes the program about 99.9% free.
And that my friend is indeed free enough for me.
The biweekly mortgage service provider that I use have a very informative website with contact info at:
//www.biweeklymortgagehelp.com
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