[Doug Crf]

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

[aqua@home]

It is always beneficial to pay any amount extra you can. I know the banks' websites in Canada all have mortgage calculators. Most of them even compare your payment schedule. I think www.ingdirect.ca is an all right one. I hope that helps at least a little.

[Dr D]

I do mortgages for a living, and believe that the bi-weekly payment plans generate income for the mortgage company at an excessive cost to the consumer. You can accomplish the same thing by adding $50 per month, or whatever to your regular payment, with instructions to apply that amount to the principal. I have seen many people who throw extra money at their mortgage while they still carry large balances on their credit cards. You should only throw money at your mortgage when: all your loans and credit cards are paid off; when you have money saved to pay cash for the new roof, vacation, new car, etc.; when you are putting the max contribution into your 401-K; and when you can't find another investment with a higher after tax yield than your mortgage. You should always put any asset to it's highest and best use.

[bryan305]

So basically what you are saying is that you are so rich and so lazy that you are willing to pay $800+ for the priveledge of not having to write 24 extra checks in 24 years. Damn! I think your time is more valuable than mine.

[jimfun71]

I also looked at this type of mortgage and found it to be a bad for the me. You can get a 30 yr and pay an extra payment and knock 5 years off or you can get a 25 or 20 year mortgage and just make 1 payment per month. You should really run the numbers and see if it will benefit you or the bank.

[kp2171]

Use your bank acct automatic payments to do the same thing without the expense.

We considered doing the same thing... using the mortgages co's program, until we saw they would charge us $$ to sign on.

Idiots with too much money... that's the market. You want no hassle payments, and you want to save $$?. do it yourself through your bank. No fees, no problems. If your bank doesn't support automated, reoccuring, electronic, scheduled payments then find a bank that is doing businees in the 21st century.

[Fresno-Nick]

Doug,
Are you really going to live there for 24 yrs? Never get yourself into a contact that you may lose your house on... I don't recommend the bi-weekly but if you insist just write the check out by yourself at the end of the year.

[dws21396]

We did this with our mortgage. At first I was not sure that this was a good idea because I could do this myself. I did some "what ifs" and found that the bank had a better deal. We cut our mortgage time by six years and saved $35,000.00 in interest. The requirement was that we had to have our mortgage payment deducted electronically. Since I'm now retired from the construction industry I now have a steady payckeck each month. A fee was involved that I was OK with. We recently refinanced our house, But, were able to enter this program after we had had our loan for at least two years. Talk to your mortgage broker to get there take on this.

[dws21396]

There are some people I talked to that thought that more than one monthly payment was going to be charged against there account. I find that the mortgage company has only taken one combined monthly payment per month. I feel that this adds equity to our house that will give us a better return on our money.

[porky]

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

We did this after refinancing our mortgage and our house will be paid off in 19 years. Two time a year we pay 3 mortgage payments in a month because we pay every other Friday. We will save about $50,000.00. We also opted to add an extra $25 to each payment and the nice thing about it is this program goes with us to any other house that we may purchase. This offer came through the mail but I did check out our mortgage company and they did not offer as good a deal.

[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]

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.

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