AgentMortgage

Biweekly payment programs: Use lender’s or make your own?

Key factor is whether payments are credited biweekly or monthly

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

"My husband and I get paid biweekly. This year I made sure the mortgage payment was made every other paycheck. Next pay day (Oct. 26) I will be making the December 2007 payment. I figure I will be making one extra payment per year at this pace. My husband wonders whether or not this will really work to our advantage?" The answer is "no." While it is convenient for you to make a monthly payment every four weeks, you won't benefit if your lender does not have a program that accepts payments on a four-week schedule. I have never seen a four-week payment plan. When you make the payment due Dec. 1 on October 26, the lender will credit your payment as of Dec. 1, when it is due, not on Oct. 26. You will not shorten the life of your mortgage doing this, and you will give up the interest earnings on your advance payments. The interest on the money from Oct. 26 to Dec. 1 will be earned by the lender rather than by you. Many lenders have biweekly payment plans under which borrowers make half the...