I know I asked a question in the subject line, and I invite answers, but for me, the answer is a very loud yes because we did it and it worked great. I'm aware that it's split down the middle and depends on who you ask... some people and even financial advisers are saying that it's not worth it, and others strongly advise it. For us it was worth it. I've also heard that the house gets paid off just a month or two faster. That's ridiculous... it amounted to years. I assume that there are some really lousy programs that cheat people and maybe *do* amount to just a couple of months, though. I do know that some programs can charge way too much, so it takes some research and talking with real estate and maybe bank people to find a good plan. Bottom line for my own case is that with the combination of biweekly payments and dumping as much extra principal payment into the mortgage as humanly possible we had the house paid off in 8 years instead of 30 because it was a 30 year mortgage.
I think that can be an excellent idea. I know some banks, including the one in which we have our mortgage, has a online access that allows us to make payments whenever. Its handy to grind away on that loan.
It would definitely help you save on some interests and it might be an okay move if its the house you are planning to stay in but it wouldn't be a sound investment plan. One of the main factors an investor loaning from a bank would look for is to get low monthly payments so they can own the property without tying down too much money into it. The reason is that they are going to sell the house in a few years and make a profit off the differences between what they sell and bought for so they wouldn't be paying the full mortgage anyway. There are good debts and bad debt. Good debts help you make money and often pays for itself so don't be in a rush to settle it.
Yes, it is! One thing I learned early (thankfully!) is that when an extra payment was sent, I needed to specifically mark (on the check *and* a note I always sent with extra payment) that it was to be applied against the principal only. They apparently don't automatically do that without being told.
This was our home and not the investment property, yes. Also keep in mind that the biweekly plans don't double the payment or anything... it didn't cost more (hmmm... maybe a tiny bit more, I'm not recalling the numbers at the moment) than paying monthly would have.. it's just PAID (divided) every two weeks, which means there's an extra payment a few times a year. I doubt that anyone would choose a biweekly plan if each payment was a whole mortgage amount instead of half... I know I wouldn't!
Yeah, I used to be a mortgage broker a long time ago, and biweekly paid it off several years faster and saved money. Anything that eliminates more debt and eliminates it quicker is a good thing.
I have never come across the concept of paying your mortgage every two weeks but reading your story here sounds very interesting and intriguing to me. I'm not so sure that the banks that I deal with our is open and would have this kind of option but I'm now very willing to look into this. I'd love to be able to pay my mortgage off a whole lot sooner the whole lot quicker. Some banks I hear do have penalties for clients who pay their mortgages off quicker than they expected. To bit of a tricky thing but it sounds very interesting and I think it will be very beneficial.
This is a program that (unless I'm totally mis-remembering) is completely separate from a bank... it stands on it's own and works with the mortgage company. I think that writing out a check every two weeks would be a pain, but we had it taken directly from the bank and fortunately the payment day fell on the same day as the paycheck. (every other Friday) Okay, skip what I just said. I thought I'd better research what I said to be sure, and I was wrong. *OUR* place was independent from a bank, but some banks do indeed offer it as an option. Worth checking into.
Your pre-payment penalties will be in your contract, but they are generally restricted to paying the loan off entirely in the first few years. Most loans that I'm aware of will allow for added principal payments that don't fully pay the loan off. But check to see what's in writing before signing on the dotted line. And most loans are sold from institution to institution anyway - so the original lender is usually not concerned if you refi in 5 years or pay it off in 15 years or whatever.
I would prefer monthly plans. That way, I only have to worry once a month. Why add to the headache? And the number of payments you have to make every month? When it comes to paying off loans faster, I don't need bi-weekly payments to do that. I'm pretty conservative. So, when I have a lot of extra money, I like to put it towards paying off my loans early anyway. Doing it this way means I can decide "when". I prefer to keep as much control of how I move my money as possible. But that's just me. ;D
