Bi-Weekly Payments / Mortgage Loan Modification Alternetive

I have had a few questions as of late about bi-weekly payment options. Are they good? Are they bad? Should I do it on my own? If my lender turned me down for a mortgage loan modification becuse I wasn't late on my mortgage, and my home is underwater, what do I do? Here is my take on Bi-Weekly payment plans......DO IT!

Bi-Weekly payment options have been around for a long time. By making half of your mortgage payment every two weeks, you will be able to apply one FULL mortgage payment towards your principal each year! The way it works is, approximately every (6) months you will have a month where your every other week payment schedule will hit three times that month. Therefore, at the end of that one month, you will have paid an extra half payment.

Now, by immediately applying this half payment towards your principal balance, the interest that accrues on your next payment will be less because there is a smaller principal balance. Therefore, the portion of your monthly payment that goes towards interest will be smaller, and the portion paying off your principal balance....HIGHER! By simply paying an extra half payment every (6) months to your mortgage, you can eliminate approximately 7-8 years off your mortgage! Therefore, saving you tens of thousands of dollars in interest.

80% of home owners over the age of 60 still have a mortgage! Do you want to retire and still have the biggest debt you owe hanging around? No! Enjoy retirement! You have worked far to long and hard to retire and still have a huge mortgage payment hanging over your head!

The time has never been better to start a bi-weekly payment program. Our home values are dropping rapidly and many are underwater as far as what they owe on the house compared to what it is worth. If you are in this scenario, you are essentially trapped! Can't sell or refinance. You have to stay put until you have enough equity to you can "wiggle" out. The only viable solutions are selling your house on a short sale, a mortgage loan modification or paying your equity down as quickly as possible with a plan such as bi-weekly payments.

Can you do this yourself? You definitely can. But like most home owners, you have probably tried it in the past and failed to continue to make your extra payments for what ever reason. It takes financial discipline in which many do not have. Almost like diet plans. We all try and eventually, most fail due to whatever excuses. That is why contacting a bi-weekly payment service provider will be your best move. A personal trainer if you will.

These companies will have your payment taken directly out of your checking or savings every two weeks. It will be a little strange at first, breaking your habit of paying monthly. But after a few months, you will be accustomed to it.

Make sure the company you choose applies your extra half payment towards principal IMMEDIATELY! Some companies will hold the half payment for 6 months until they receive the other half before making your extra payment. This doesn't help you as much because your principal balance is still untouched and accruing interest at the full amount for 12 months, until the extra payment is applied. Look at your accruing interest like the snowball effect. Try to smash that snowball as frequently as possible!

There are fee's associated with this service. You can expect to pay between $395 - 1% of your gross interest savings. For example, if were saving $80,000 in interest over the course of the program, you would be billed between $395-$800. There are also ACH direct withdrawal charges that can be expected between $3 - $5 / payment.

For the few dollars it costs to get started on one of these, it is far worth the long term savings! A guaranteed investment if you will, countering interest!

Click this link to go to a Bi-Weekly Saving Calculator. See how much you could save!

Bi-Weekly Mortgage Payment Calculator

I am an authorized Bi-Weekly consultant for the Bi Weekly Mortgage Association. Contact me with any questions or scenarios you might have. I am here to help!

-ED