Quote:
Originally Posted by My Own Eyes
Actually for the financially disciplined it's better to do that on your own rather than pay to enroll in the program. Just calculate what the extra amount the 2 week plan would allow you to pay, and then divide that by 12 and tack it on as a principal only payment to your monthly mortgage payment (and save yourself the 75 bucks). The added benefit is that in case of a financial hardship, you can momentarily go back to paying the regular payment.
The other thing I did to save myself money on my mortgage (and again this only works for the financially disciplined), when I recently refinanced my mortgage (due to the divorce), I chose not to escrow my taxes and homeowner's insurance. Instead, I "pay" my escrow payment every month into a high interest savings account (such as ingdirect). At the end of the year, I get to pocked the 3% interest I earned on that money, rather than my mortgage company.
I also do that with my taxes to the government. I chose to have the least amount of taxes possible taken out of my paycheck. Sure, I have to pay money in every year, but once again, I got to earn interest on it, and not the government.
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Well, we wanted to have our payments automatically drafted, so it was just easier for us to enroll in the program. You still have to be a payment ahead...or is it a half payment? Because you have to be ahead of your regular mortgage payment. e.g., you can't pay half your mortgage payment, and then pay the other payment two weeks later. You have to pay your mortgage in full, on time, regardless, so the half payments have to show up in time to be a full payment. I guess that makes sense.
Also, it does benefit you, interest-wise, to make bi-monthly payments rather than once a month, even if you tack on extra payments toward principle, because every time you make a payment, it's reducing your interest at the tail end of the loan in proportion to what you still owe. (Moreso than if you let that balance sit there for the whole month before you make another payment.)
But, I agree--there are definitely ways to pay it down significantly on your own, and people would be surprised how quickly a "little bit" each month will reduce your principle, and resulting interest.
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