I received a letter from my mortgage company, with an offer that sounds too good to be true.
Instead of paying $2000 every month, pay $1000 every 2 weeks. The result - you save over $50,000 over the life of the loan, and payoff 5 years sooner. Also, a biweekly payment matches your payday schedule and makes budgeting simpler!
Now, what's the catch? Just paying 15 days before the due date cannot have such a drastic effect on your mortgage? Googling for "equity accelerator", led me to this fine article at dallasnews, pay down your mortgage without paying for the privelege.
So that's the catch, a biweekly payment schedule is not the same as a semi-monthly schedule. You pay 26 times a year, not 24, and then pay a fee for this convenience!
The notice you received is not from your lending institution but they will try to make it sound as though they are one in the same. These companies provide this service for a fee, its not free. Why pay someone else extra money to pay your loan. Sure you can save money but you would save much more if you worked in additional principal payments to your lending institution on your own. These companies that will flood your mailbox after receiving your home loan are scam artists and should be imprisoned. You end up making one extra monthly payment every year plus paying them an up front payment and an additional monthly processing fee. This is no deal; this is robbery for anyone stupid enough to believe them.
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