Biweekly Mortgage Programs - Are They Worth the Money?

Numerous companies advertise that they can help you pay off your mortgage in a lot less time. These services, which are known by several names, most commonly "mortgage accelerator", advertise that they can cut nearly 10 years from your thirty year repayment schedule. All you have to do to reap the benefits of their system is to enroll by paying a costly fee. Is an accelerator program worth the expense?

These programs offer what is often caled a biweekly loan. The company will charge a few hundred dollars to apply for their plan, as well as a small fee every two weeks. By signing up, you agree to allow them to take half of your mortgage payment out of your bank account every 14 days. The plans do work, but not because of any monetary magic used by the companies that offer the programs. The plans work because you are paying more money.

There are fifty-two weeks in a year. By withdrawing half of your house payment out of your savings or checking account every two weeks, you are making thirteen full payments per year, instead of the twelve you were making before. By making an extra payment every year, you are paying back your mortgage principal sooner and reducing interest that will be applied to the outstanding balance. This will, over time, take a number of years off of the time it takes to repay your mortgage.

Are these plans worthwhile? They could be, but only if you are rather lazy. It isn't necessary to enroll in a plan or pay upfront and pay regular fees to utilize this method of repayment. Most any lender will permit you to pay extra money whenever you like. All you must do is note that the extra cash is to be applied to the loan principal. A lot of lenders provide a place on the form that you put in the mail or use on their Website for that express purpose. You may mail in a bit of additional money each month, or you could send in one full additional payment each year. The net effect is just about the same either way.

If you are interested in making extra contributions towards paying off your home loan early, all you need to do is contact your lender and ask what options might be available. You will likely find that any one of a number of free options are available.

By: essmeier