Biweekly Mortgage Programs - Are They Worth the Money?

A number of companies frequently advertise that they can help you pay off your home loan in a lot less time. These programs, which are known by a number of names, including "mortgage accelerator", purport that they can cut as much as 10 years off of your 30 year repayment schedule. All that is necessary to enjoy the rewards of their system is to apply by paying a substantial fee. Is it worth the expense?

These programs are variations on what is known as a biweekly mortgage. The company will charge you a few hundred dollars to enroll in their plan, along with a fee every fourteen days. By signing up, you agree to let them take half of your mortgage payment out of your bank account every fourteen days. The plans do work as advertised, but not because of any monetary magic used by the lenders that offer the programs. The programs work because you are making extra payments.

There are fifty-two weeks in a year. By taking half of your mortgage payment out of your bank account every two weeks, you are making twenty-six half-payments, or thirteen full payments per twelve months, instead of the twelve payments you were making previously. By making an extra payment every year, you are paying off your loan principal faster and reducing the amount of interest that will be applied to the outstanding balance. This will, in time, take a few years off of the time it takes to repay your home loan.

Are these plans worth your while? They could be, but only if you are somewhat lazy. It isn't essential to enroll in a system or pay ahead of time and pay monthly fees to make use of this method of repayment. Almost any lender will allow you to pay additional money whenever you like. All you need to do is indicate that the extra money is to be applied to the loan principal. A lot of lenders provide a place on the form that you mail in or use on their Website for that very purpose. You may mail in a little additional money each month, or you could send in one extra payment each year. The net result is virtually the same no matter what you do.

If you are curious about making extra contributions towards paying off your mortgage early, all you have to do is get in touch with your lender and inquire about what opportunities might be available to you. You will likely discover that a few free options are there.

?Copyright 2007 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.HomeEquityHelp.net, a site with information regarding home equity loans, mortgages and lines of credit.