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.