Since moving, I have received SO much junk mail. I have received about three letters telling me how amazing biweekly mortgage payments. I already had my mom for that one! The junk mail isn’t all bad – I also got a coupon for buy one get one free ice cream at an amazing place up the street :)
In case you can’t already tell, I’m not a huge fan of biweekly mortgage payments. Here’s an excerpt from one of the letters (emphasis completely theirs):
* A bi-weekly program will ELIMINATE 6-10 years off your current $286,000 loan.
* No Upfront Fee to setup biweekly (now deferred).
* Weekly and bi-weekly debit amounts are easier to budget throughout the month because the debits are much smaller and your account can be debited on or around the same days you get paid.
This mostly seems sketch because it requires sending my payments to a third party processor instead of to my lender and then that processor sends the payments on to the lender. Plus, there are fees involved. And it takes up to 5 business days for this third-party processor to receive the funds.
When you make biweekly mortgage payments, you usually end up making MONTHLY_PAYMENT/2 every two weeks. Since there are 12 months in the year, but 26 biweekly periods, you end up making the equivalent of 13 payments throughout the year. Adding an extra $100 to each monthly payment would accomplish the exact same thing as making biweekly payments.
Even if my lender offered a biweekly payment schedule, I wouldn’t do it. Why? I am paid monthly, on the last business day of the month, and my mortgage payment comes out on the 1st of the following month, just like my rent did before. I would consider doing biweekly mortgage payments if I was paid biweekly or weekly, but as it stands, biweekly payments would result in unbudgeted money coming out of my checking account two months out of the year.
Readers, what do you think of biweekly mortgage payments? Have you used them or do you just remit extra payment with your regular monthly payment?