To split up my mortgage in 2 payments and pay it twice a month, with my financial institution, I have to go through a Mortgage Accelerator Company and pay a 1 time of fee of $295.00.

A representative from the financial institution, said that I could every 6 months pay half of my premuim just on the principle or divide my mortgage payment by 12 months and put that amount toward the principle each month, I would accomplish the same thing.

Correct me if I am wrong, I believe I would be accomplishing the same thing, but I would be paying more money out of my pocket doing it myself. From what I see, when the company do it each month, I won't experience any change in the amount that I am paying compared to if I do it myself each month, it would be extra money out of my budget that I would be putting toward the principle.

Any tips would be appreciated.

Thanks in advance.

Where do you live and who holds your mortgage?

Why do you have to go through a company? You can pay any amount you want as long as you make at least the required payment. I've never heard of a lender requiring that you go through a 3rd party.

Any amount you pay over the interest due that month goes towards reducing your principal balance. The more you pay the less the interest will be for the next month. If you pay more that the scheduled amount you can change the amortization. This reduces the total you will have to pay by reducing the amount of interest due.

If you have Excel, there is an amortization template. You can use that to calculate your savings by paying more.

Just do it yourself... you save the $295 junk fee... and if you have an emergency and need the extra money you will have it... not so with their plan.

Just specify the extra money goes to principle and be done with it.

You go through half as many checks... that you likely pay for... you go through 1/2 the postage... that you pay for

And it gives YOU control... not them.

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Originally Posted by ScottGem

Why do you have to go through a company? You can pay any amount you want as long as you make at least the required payment. I've never heard of a lender requiring that you go through a 3rd party.

Any amount you pay over the interest due that month goes towards reducing your principal balance. The more you pay the less the interest will be for the next month. If you pay more that the scheduled amount you can change the amortization. This reduces the total you will have to pay by reducing the amount of interest due.

if you have Excel, there is an amortization template. You can use that to calculate your savings by paying more.

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Thanks for the information. I know that I do not have to go through a company. I just thought in the long run, it would be less money coming out of my pocket in the long run even after paying the one time fee of $295.00.

Let me give you this scenaro. If a person pays $200.00 for the principle and interest and another $200.00 for the home hazard insurance monthly to the mortgage company. The monthly amount paid is $400.00. The mortgage accelerator company pay the mortgage company $200.00 every two weeks. So at the end of the year or the 52 months, I am actually paying a extra $200.00 on the principle. I assume why people choose to go that route is because to the customer it would seems as if he is just paying the $400.00 each month.

Now, to do get the same benefit of paying $200.00 each year to the principle myself, I would have to pay $17.00 monthly to the principle.

Tell me this please, by the Mortgage Accelarator Company paying bi-monthly, am I actually paying an extra $200.00 a year or not out of my pocket?

If the total payment is $400, that means you would pay $4800/yr paying monthly. If you pay $200 every other week you would pay $5200/yr. so the extra $400 would reduce your principal. Also depending on how they calculate interest, it can further reduce the amount of interest. So you finish the loan sooner.

Many people like the bi weekly method because it does seem like not paying more. The real question is can you afford it. Whether you pay that way or add an extra $33 to your monthly payment (approx $400/yr), if you can afford to pay more it will save you in the long run.

I would recommend the mortgage accelerator, coming from someone who works at a mortgage company right now, the people that I talk to with the equity accelerator are really happy with the service, you don't need to keep contacting your mortgage servicing company or pay any fees while making payments, in fact, once you set it up all you have to worry about is the money being in your bank account every time they do automatic one-time drafts.

Why pay for a service when this can be done for free easily?