Early Mortgage Payment Plan

A lot of junk mail came with he purchase of our new home. I expected this bombardment. Most of the mail gets the once over and makes its way to the shredder. However, a letter regarding an early mortgage payment plan caught my eye.

The premise is this: Make two payments a month of half of what your mortgage would have been, and you can pay your mortgage off 6 – 7 years early. In essence the first half payment will be two weeks early, very slightly reducing the amount of principle that the interest is calculated upon. In addition, as these payments are made bi-weekly, two half payments will be deducted directly from the principle.

I cannot see where this would necessarily be a bad idea, but I am looking for a second opinion. Please take into consideration that there is a $295.00 enrollment fee plus a $1.00 per payment service fee, which would total $26.00 a year for the life of the mortgage. The payments would be automatically deducted, which could be scheduled wither way, on every other Wednesday.

Your thoughts?

About Ron

I am the father of two wonderful boys, and the husband of one wonderful wife.
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One Response to Early Mortgage Payment Plan

  1. Andy says:

    This works because there are 12 months a year,yet every 2 weeks = 52/2=26 payments, divide by 2 =13 payments. Therefore by paying every 2 weeks you get an extra “month”

    You should find that you don’t need to pay any enrollment fee to a third party company and just pay your mortgage yourself every two weeks, make the extra payments and reduce the interest owed. Check with your mortgage company that there are no early repayment fees (there shouldn’t be)
    If you need more informatin then let me know as I have a printout from church on this.

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