Just wondering if any one has had any experince with a biweekly type mortgage.
We are getting ready to fill out some papers to start up that type of
mortgage.
I know it would be cheaper to just pay the extra payment myself.
That is what it works out to is paying an extra payment a year.
But to start with we are just going to fork up the start up fee and
then pay the dollar for each withdrawl biweekly out of my bank account.
So it will be 400.00 to start up ant then 2.00 a month and I will not have
to worrie about sending the payment.
It will knock almost 6 years off a 30 year loan.Any thoughts out there?
Thanks Doug

excon

Hello Doug:

If the bi-weekly company is not offering competitive rates, then you should shop for somebody cheaper. But, because this company might charge too much for their product, does not diminish the value of their product.

Bi-weekly mortgages are great. They work. I think you should do it!!!

Indeed, they're nothing more than you could do yourself, if you would....... But, you (like most people) DON'T do it themselves. So, a plan like this is simply a structure for fulfillment. It's just like a Christmas savings plan offered by your bank. You could do it yourself, but the bank sets up a structure for fulfillment, and it works pretty good.

excon

Dr D

I agree that a bi-weekly mortgage can save substantial mortgage interest over the life of the loan for those lacking the self discipline to pay extra principal on a regular basis. I stand by my previously posted preconditions to such prepayment. But if your wish is to have your nest free and clear ASAP, you might as well opt for a 15 year loan instead of 30 years. You should be able to realize close to a 1/2% reduction in the rate, at a 30% to 36% increase in the scheduled P&I (the higher the rates, the lower the % increase). Bear in mind that should you have a drop in your income, the higher payment on a 15 year loan could increase the chances of default.

excon

Hello again:

Exactamundo, Dr d. That's why, in my humble opinion, a 30 year loan that's paid off bi-weekly is a better option, for two reasons. 1) If one has a drop in income, they are not REQUIRED to make the higher payment that a 15 year loan requires, plus 2) there's no refinance charges assuming there's a 30 year loan in place already.

For one considering a brand new loan, however, and isn't concerned with a drop in income, a 15 year loan would be ideal. Plus, 15 year loans carry a lower interest rate, so you save on both ends.

excon