Personal Finance Advice

I’ve heard about the biweekly plan. In my experience, it works well for very structured people. Other alternatives are to round up when you pay your mortgage, or to have extra money added to your automatic payments. Even a little bit each month can make a significant difference.

Be wary of paying a transaction fee to the mortgage lender for a 24 month payment cycle. This is common as the perceived (justly or not) value of paying twice a month has taken hold. Angie’s suggestion about rounding up is probably a better way to go.

Note that most mortgage loans only permit one payment per month. That being the case, if you make arrangements with the lender for biweekly, they are using your money the entire year and then at the end of the year they make the 13th payment. And for this they often charge a set up fee of as much as $500 and sometimes a monthly transaction fee. All for something you can do yourself. Just divide your mortgage payment by 12 and add the additional amount (or more if you can) to each monthly payment ($1200 mortgage/12 = $100 add’l per month and that equals the 13th payment by the end of the year). Be sure to tell you mortgage lender that any excess payments should be applied to the principal of the loan. Also, a true biweekly plan is paying and applying half your mortgage payment every two weeks. This will reduce the payment period significantly (a 30-year loan is reduced to a 24-year loan, saving you 80 payments (6 yrs x 12 payments per year). However, trying to find a lender that has a true biweekly mortgage loan program that actually applies the payment every two weeks is hard to find, but well worth it if you spend the time looking for one.

Oops sorry, that’s 72 pmts