Way off topic (but it might be of interest to you...)

dan1ecu

I received an invitation from my mortgage company to enroll in their "biweekly plan" for $375 plus $1 for every biweekly payment that's made. The idea is that you will save a large amount of money by paying half of your regular monthly payment every two weeks. This works out to one extra mortgage payment per year.

Well, I can pay extra towards my principle any time I want to - for free! I think that the mortgage company is trying to put one over on people who don't realize this. There are probably many forum members who have mortgages and are also being solicited; so I wanted to warn you about these scams.

Dan

UncleJoe

Scam may be a little overkill. Not the best deal for the homeowner is probably a better description.

The biggest benefit of such a plan however is that it sets up a schedule for people to follow. It's true that you can pay additional principal anytime you want to but most people do not have the discipline to do it.

Joe.

dan1ecu

Hi, Joe –

True, discipline is a problem for a lot of people. Of course, most companies offer automatic payment plans, where the money is drafted from your account each month. Additional principle can be applied that way.

As far as the word “scam” is concerned, I think that the mortgage company leaves important information out of their advertisements. What’s *not* said can be a form of deception, just like making false statements is deception.

Oh, well... back to work.

Dan

Petescorner

I get similar letters from my mortgage company all the time. The funniest one, was when they said I had to "hurry, before this offer ends!"

ricko

Principle paydown, on a monthly basis, is a tremendous way of saving money (read that interest), providing one does it faithfully. Cheers, RickO

Outhaul

Ditto with Rick. Sporadic principle pay-down will get you nowhere in a hurry. You have to be dilligent about it or your gain is little. I get these offers from my mortgage company all the time. I ignore them and continue to pay 1.5 mortgage payments per month for free. My momma didn't raise no fool

To charge a customer a premium to pay more money? I'll never understand why people do it. Sorta like paying a store a membership just to come in and spend your money. I don't attend coin shows that charge admission either. I have a problem with paying someone money to spend my money.

Just my most humble opinion.

Cheers,

Bob

BNE

I pay $100 extra on my mortgage every month to pay down my principal. Not too many other safe ways to make a guaranteed 6.25% return.

UncleJoe

Got you beat!!! I'm making 7 1/4% on my money.

What??? I am not stupi...

Joe.

gemseeker

Factoring my tax deduction on the mortgage interest, my investments don't cover the reduced interest rate on the mortgage to pay for the money borrowed on the mortgage. I guess I would earn a bit more by paying off the mortgage entirely.
Many mortgage compies come up with new ways of setting up a payment schedule. Some are beneficial to you, but they nearly always are beneficial to the lender.

ldhair

I don't look at my home as an investment. It's a liability. Use the extra money to buy a rental property. It's an investment that can help to pay your home mortage.