Bi-weekly mortgage payments

  • haywardbound
    New Brighton, MN
    Posts: 1107
    #1254604

    I’m looking into setting this up. Should I try to set this up on my own or pay a fee and have a company take care of it.

    I’m currently refinancing right now, so I don’t know what bank will have my mortgage (possibly Chase).

    The main advantage (goal) for us is to have half of the mortgage payment come out of my paycheck each payday, and the bonus is to make the extra payments to the principal.

    Any cons with this payment plan?

    Any input would help.

    Thanks,

    Jon

    bradg
    Posts: 507
    #565913

    Send a PM to Gary Wellman, I bet he would be able to give you some info about this.

    If he sees this post I’d bet he’ll reply, but if not send him a PM

    dtro
    Inactive
    Jordan
    Posts: 1501
    #565914

    DO NOT pay a fee to do this. It’s just as easy on your own.
    Basically, it amounts to one extra payment a year.

    trumar
    Rochester, Mn
    Posts: 5967
    #565915

    We just bought a house and we set ours up with our mortage company right away.
    No cons as far as I know
    We did it for the same reasons you want to

    gary_wellman
    South Metro
    Posts: 6057
    #565947

    I would not pay a fee.

    “most” of todays mortgage lenders offer on-line mortgage maintenance.

    Can I ask you why “Chase”????
    Shoot me a PM with questions.

    NStanley
    Aitkin MN
    Posts: 7
    #566492

    Don’t mean to sound smart alec but why are you asking this of people you may or may not know- just because they are fishermen (and probably good ones at that) but anyone with any amount of knowledge may answer you. Mr. wellman, you know if you are in this business why he may be dealing with any particular lender. May I please suggest that you have someone you know and trust help you with this and not strangers. Congratulations on helping yourself improve your financial situation.Best wishes. pdw

    cougareye
    Hudson, WI
    Posts: 4145
    #566528

    Welcome to the site PDW! Enjoy the site, this is part of what we do here!

    Back to the question, aren’t there issues of when the financial institution will post your payments? If you start paying on a loan that was set for monthly payments, be sure that there is favorable language to start paying bi-weekly. Some institutions I’ve heard will still post the interest monthly and you won’t really gain other than making 1 extra “monthly” payment per year.

    My rec is to make sure you have professional counsel on this , don’t try to set it up yourself.

    ET

    gary_wellman
    South Metro
    Posts: 6057
    #566549

    Quote:


    Mr. wellman, you know if you are in this business why he may be dealing with any particular lender.


    Welcome to IDA Mr. PDW.
    Yes, I have a 90% belief why he is going to Chase. However, does Jon?

    There are entirely too many people getting “screwed” these days in the mortgage industry. Even your “educated” consumer doesn’t fully understand what is going on or know their options. As many folks here know, I offer my time and support to help them all @ IDA through their mortgages, even when I’m NOT doing the mortgage for them.

    DaveB
    Inver Grove Heights MN
    Posts: 4451
    #566569

    When I looked into the biweekly mortgages they were a total scam. Citigroup was offering them and the rate was higher than a 30 year mortage. Typically, if you shorten your mortgage, you can lower the rate.

    So, how could Citi offer a higher rate for a shorter mortgage? Because they run the number and say “look at all the money that you save by making the extra payment”.

    You would save MUCH MORE money by:

    1) taking a stardard 30 year at the lower interest rate and put 1/2 of the payment in a saving acct biweekly, then make the mortgage payment each month. At the end of the year, make the extra payment and pay down principal.

    2) Take a 15 year mortgage at an even lower rate

    Also, remember, you might not aways be on a bi-weekly pay schedule. How many stay at one job for the life of their mortgage?

    Mark Steffes
    Farmington, MN
    Posts: 1376
    #566610

    But can’t you take like 7 yrs off your 30 fix rate mortgage by pay one extra payment a year. That would go directly to the principal?

    gary_wellman
    South Metro
    Posts: 6057
    #566633

    All depends on what your interest rate is and “when” you make your payments.

    Making one extra payment at the end of the year doesn’t do as much as making a extra smaller dollar amount payment every month or as much as every 2 weeks.

    DaveB
    Inver Grove Heights MN
    Posts: 4451
    #566643

    Yes, you can take years off your mortgage by making an extra payment.

    But if you are paying a higher interest rate on a bi-weekly mortgage then you are paying more in interest than if you just made higher payments on a standard 30 year mortgage or made a single extra payment on your 30 year.

    You can also step down to a 20 year and get an even lower interest rate and pay about the same amount of P&I per year as the bi-weekly and be paid off even earlier.

    chamberschamps
    Mazomanie, WI
    Posts: 1089
    #566702

    Quote:


    As many folks here know, I offer my time and support to help them all @ IDA through their mortgages, even when I’m NOT doing the mortgage for them.


    I will second this. Thanks for the help Gary.

    James Holst
    Keymaster
    SE Minnesota
    Posts: 18926
    #566710

    Gary is a fantastic resource for those of us with questions related to mortgages.

    My gal and I are going through the process of building a small house and Gary was instrumental in helping us find the right bank to handle the lot and construction loan. In our particular case Gary knew of a local bank that offered a program that he couldn’t offer…. and he didn’t hesitate to suggest his competition in this particular case. Now that’s someone looking out for the best interest of the customer, first!

    Anyone even thinking about a refinance, new mortgage, etc., needs to talk with Gary. He’ll walk you through all the options and help you find the best program for you.

    chomps
    Sioux City IA
    Posts: 3974
    #566732

    “May I please suggest that you have someone you know and trust help you with this and not strangers.”

    You may or may not have noticed this, but the one thing different regarding this site, it isn’t just about fishing. Some come here first because we are all family. If you can’t ask your family for some sort of advice, who can you go to? As mentioned here before, Gary will give you subjective advice, meaning that he can and does tell people what is right for them (family), not just what is right for his wallet. I know from experience that any bank can advertise a low interest rate, where you get killed is the fees and expenses to close the loan. As most of you have mentioned, any extra payment to principal will reduce your interest expense. A systematic approach will always pay dividend. Remember it is almost always in your best interest to pay off your mortgage last. Payoff other debts which do not allow you to deduct interest payments first, then work your way to the mortgage. If you itemize, your net after-tax interest rate will always be less than than the “on paper” interest rate. Just food for thought.

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