countrywide mortgage pay 52 plan any good.

Hi folks,

A couple of weeks ago, I subscribed to the pay52 plan with my mortgage company countrywide. This plan withdraws 1/4th of your mortgage payment from your bank every week.

I was under the impression (wrongly it appears) that countrywide would apply this amount each week to my mortgage. It appears, countrywide just sits on it (earning interest for them) until it collects the whole mortgage amount and only then applies it to my mortgage. On top of it, they charge me 1$ each week for this "service". I have asked countrywide customer service for clarification.

I have googled and downloaded a couple of mortgage calculators, but haven't been able to satisfactorily resolve the following two questions

-- are there mortgage companies which have weekly amortization schedules
-- would making the same annual payments (12*payment/52) weekly, make a significant difference in the interest burden on a 15 year loan.

my layman's logic is that since each month, i am paying 1/4 of the payment 3 weeks early, 1/4 2 weeks early and 1/4th 1 week early, the interest burden should be lower...

any help, clarifications, pointers, nuggets of wisdom from the wise and experienced here would be much appreciated!

You should cancel this ASAP. It's costing you $52/year plus whatever sign up fee for something you can do yourself. Just take 1/12 of your monthly mortgage payment (minus escrows if you pay them) and add it to your monthly payment, specifying the extra payment as additional principal. You will get the same net effect. Robert Burruss (sp?) has a syndicated column (appears in the Real Estate section of the Washington Post every Saturday for me), and cautions heavily against such pure profit schemes for mortgage companies.

Speaking of escrows, you can call and ask your mortgage company to let you handle your own escrows (for home insurance and property tax). Open an ING savings account and accrue interest on your monthly escrows rather than having your mortgage company make more money off your money.

Instead of making 12 monthly payments, what most biweekly programs do is take 26 "half-payments" (every 2 weeks). This is the equivalent of 13 full payments per year. This "extra" payment is what pays down your mortgage quicker. You could do that yourself.

Also, most bi-weekly plans DO NOT actually apply 1/2 payment every 2 weeks to your mortgage as many people think.. what they do is HOLD your money for the month, then make ONE payment before the due date.

Since they usually charge you a setup fee and per-payment fee for this service, if you are disciplined its better to simply pay a bit extra on your regular monthly payment. Adding 1/12 of your mortgage amount each month (designated as "principal paydown") should payoff your mortgage QUICKER than a biweekly "plan", since you arent paying any fees.

Also, not all biweekly services are run by your lender (some are independent 3rd parties) and many biweekly services have been known to mess up, causing further problems.

I have had 3 loans with Countrywide (and still have a HELOC). There customer service is awful. If you have a question or an issue get ready to repeat your problem to 3 or 4 different people on the same call. I actually used them for an original mortgage once (not a note sold to them). They forgot my appraisel. I needed to keep bugging them to keep the process going. Finally, they sent the office boy to my house who did a quick walk through appraisel. I paid $250 for them to send the coffee boy over and I never received a copy the appraisel.

IMHO the best jumbo mortgage lender in the US is Thornburg . Rates/Service/Flexibility !!