Since I have everything set up automatically, I'd rather pay bi-monthly and cut out some interest in my monthly mortgage payment, but my mortgage holder only accepts bi-monthly payments from a third party.

A - has anyone heard of this, or use such a company? Are there additional costs in doing so?
B - any experiences to share?

Thanks,

 

My mort company does semi monthly and charges nothing additional. It is odd to hear they need a 3rd party as most mort companies will happily take the money at the earliest opportunity.
I love it because I pay anadditional 100 per pmt, 200/mo toward prin and cut 8 years off the 30 year mort and should save about 150K

 

Well, I also heard that paying an extra 1/12 monthly payment with each payment works out the same and is easier to do as it directly pays down the principle.

 

Any additional above the payment should be specified to principal. Otherwise the mort co can apply it as a prepay toward an additional pmt.
Agreed you can just make a 13th pmt and specify to principal or do it monthly. I enjoy the semi monthly as it applies to the principal more quickly and you will save some $$$

 

One of the mortgage companies that had my loan offered it. I don't know if it was through a 3rd party company or not, but I know that there was some outrageous up-front fee just to sign up. It was something like $350, plus something like 1-3 dollars for each transaction/payment. I ended up doing the math, and if I just put that $350 towards principal, rather than paying this "fee" (plus the transaction fees), I was actually only going to come out ahead something like $100-200 over the life of the loan.

Also, if you decide to go for it, you need to find out what happens if your mortgage is transferred. If you pay an up-front fee to enroll in the program, are you going to have to pay another fee to a new company when the mortgage is sold?

Honestly, if it's 100% free, I'd do it. Otherwise, it's just not worth the cost/hassle.

 

Stay away from those companies offering to make biweekly payments on your mortgage. They're scams.

Are additional payments applied towards the principal? If yes, then overpay your mortgage each month, which will have the same effect as making an extra payment each year. Otherwise, use another investment vehicle.

 

The nice thing about paying additional principal on your own is that when you have a bad month, you don't have to send any extra.

BTW: The term bi-monthly is an odd term, sometimes referring to twice a month, and sometimes to refer to every other month.

Paying every other week forces you into 2 extra 1/2 payments a year. This saves about 7 years in total.

Paying twice a month saves a little less, but still saves.

Also - watch out, because if you're work check schedule doesn't match up (2x month, vs evey 2 weeks), you could put yourself into a budget cycle problem.

My preference is to take a conventional payment schedule. On months where there's left over money in your budget, add a little principal to the payment. (I chose to round UP to a hundred, then add 100, so 1250 becomes 1400). That equated to 1 extra payment a year, the same 7 year savings. When I got settled, I added 200. All in all, when I'm done, I'd have saved almost 14 years on my original 30 year mortgage.

 

When I purchased my house, I looked into all this stuff and thought the bi weekly payment was a great way to save myself some serious cash. I ended up just paying extra each month and forgetting about the bi weekly payments

My payment is 1680 a month I pay 2k every payment... should have this place paid off by the time I'm 42 =]

 

Saki GT<

I think it's been stated here clearly;

Just a quick recap:

Get a 360 month loan... with the lowest monthly payment possible.

If you run into a jam you can make the minimum payment of the 360 loan.

If you have extra cash... do an overpayment specified toward principal only.

Print out a 360 month amortization table and watch the years and months evaporate

as you make the over payments.

The loans are stacked with incredible interest up front with very little being applied

toward the principal. You'll be able to knock a decade off the loan in a year or two.

No need to mess with complex payment plans.

seeya,

Jeff