I did a quick serach and couldn't find the answer to this question that I am sure has been covered some where.
I would like to pay off my mortgage bi-monthly for obvious reasons (reducing years paying off). I have received mail stating for a fee that I can do this. When I called my mortgage company to discuss (CITI) they told me I couldn't do this on my own becuase the partial payment may register as an incomplete payment.
I think this is silly to pay a company to do this when I can set up an on-line payment to do this automatically.
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From the Finance FAQ:
5. Q:My lender offers a biweekly mortgage payment plan. Is this good? A: If they charge you any fees for this service (which you can accomplish yourself for free), its generally NOT a good idea. see this threadto see an example of how many biweekly plans work.
Message edited by: lostdude on 2007-12-04 14:42:04 CST
cenergy said:I did a quick serach and couldn't find the answer to this question that I am sure has been covered some where.
I would like to pay off my mortgage bi-monthly for obvious reasons (reducing years paying off). I have received mail stating for a fee that I can do this. When I called my mortgage company to discuss (CITI) they told me I couldn't do this on my own becuase the partial payment may register as an incomplete payment.
I think this is silly to pay a company to do this when I can set up an on-line payment to do this automatically.
Has anyone done this succesfully?My mortgage is with Citi as well. Bi-Weekly payments are the same thing as making an additional payment every year. So you can accomplish what you are trying to do by taking one monthly payment, divide it by 12, and add that amount to your payment every month. Saves you the hassle of paying 26 times a year.
There are two different concepts being discussed here. The first is bi-monthly mortgage payments, which, if you can get your mortgage company to agree to, are a great idea and if your cash flow permits there would be no reason for not taking advantage of this. By making bi-monthly payments, you pay half of your monthly mortgage twice-a-month, meaning you pay off a little bit of interest a little bit sooner, which over the course of a 30-year mortgage can make a big difference. The problem is most of the large institutional mortgage companies and banks don't allow this because a good deal for you means they lose money.
The other concept is the semi-weekly payments, which is what the mailings you have received are offering. They are not trying to help you pay half of your monthly mortgage twice a month, rather they are trying to "help" you pay half of your mortgage payment every two weeks: 52 weeks/year divided by two = 26 payments of half your mortgage, or the equivalent of 13 mortgage payments every year, rather than the normal twelve. You would be much better served to put half of your mortgage in a savings account every two weeks and use the funds in that account to make 13 mortgage payments annually. That way you keep the interest and don't pay them any fees. Such "services" are definitely for the non-FWers of the world.
DavidScubadiver said: My mortgage is with Citi as well. Bi-Weekly payments are the same thing as making an additional payment every year. So you can accomplish what you are trying to do by taking one monthly payment, divide it by 12, and add that amount to your payment every month. Saves you the hassle of paying 26 times a year.Be sure to note that the extra $amount is additional principal.
ThursdaysChild said:DavidScubadiver said: My mortgage is with Citi as well. Bi-Weekly payments are the same thing as making an additional payment every year. So you can accomplish what you are trying to do by taking one monthly payment, divide it by 12, and add that amount to your payment every month. Saves you the hassle of paying 26 times a year.Be sure to note that the extra $amount is additional principal.Not necessary with citimortgage. They treat the overpayment as 'additional principal payment' and you can see it right on the website. (Citimortgage.com is great. Let's you run different payments (lump sum or monthly) and gives new amortization schedule. And my balance always matches up to Quicken balance)
BEEFjerKAY said:So why pay off mortgage faster when it's increasingly unlikely to be able to replace it in the future if/when you need to?I don't understand the question. First, why would I want to replace my mortgage? Second if I paid my house off and wished to put a mortgage on it for some weird reason, I doubt I would have any trouble doing so.
DavidScubadiver said:BEEFjerKAY said:So why pay off mortgage faster when it's increasingly unlikely to be able to replace it in the future if/when you need to?I don't understand the question. First, why would I want to replace my mortgage? Second if I paid my house off and wished to put a mortgage on it for some weird reason, I doubt I would have any trouble doing so.
He might be refering to the Never pay off your mortgage type argument. Lets not start a religious war over it, everyone has their on situation in taxes and expected return and comfort zone for debt and leave it at that.
In any case, OP wanted a way to pay 2x a month to get the benefit of the extra payment every year. I think the best way to do that is to simply to add 1/12 of a mortgage payment to each month's mortgage payment.
Personally, I have gone on and off paying $135 a month to make my mortgage a nice round number. Since I charge my mortgage on my BoA card, it doesn't really feel like I'm paying the extra money (and its not as convenient to take that $135 a month and "do something" with it as it is to just pay the mortgage and guarantee my 5.5% return. Kind of viewed it as my fixed income portion of my investments. But, of course, the mortgage interest is the only thing I can deduct for AMT purposes (other than charitable contributions) so I supposed I am screwing myself by prepaying. Fortunately, at $135 a month, that couldn't hurt too badly.
The first is bi-monthly mortgage payments, which, if you can get your mortgage company to agree to, are a great idea and if your cash flow permits there would be no reason for not taking advantage of this. By making bi-monthly payments, you pay half of your monthly mortgage twice-a-month, meaning you pay off a little bit of interest a little bit sooner, which over the course of a 30-year mortgage can make a big difference. The problem is most of the large institutional mortgage companies and banks don't allow this because a good deal for you means they lose money.
The other concept is the semi-weekly payments, which is what the mailings you have received are offering. They are not trying to help you pay half of your monthly mortgage twice a month, rather they are trying to "help" you pay half of your mortgage payment every two weeks: 52 weeks/year divided by two = 26 payments of half your mortgage, or the equivalent of 13 mortgage payments every year, rather than the normal twelve. You would be much better served to put half of your mortgage in a savings account every two weeks and use the funds in that account to make 13 mortgage payments annually. That way you keep the interest and don't pay them any fees. Such "services" are definitely for the non-FWers of the world.
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Can someone elaborate, they seem the same to me. Don't understand the difference between bi monthly and semi weekly.... aren't they both paying the same thing twice a month?
plane said: Can someone elaborate, they seem the same to me. Don't understand the difference between bi monthly and semi weekly.... aren't they both paying the same thing twice a month? Are you slow? Did you read what you quoted? Twice a month = 24 payments. Bi-weekly = 26 payments. Or do all months have 28 days in your world?
Auream said:plane said: Can someone elaborate, they seem the same to me. Don't understand the difference between bi monthly and semi weekly.... aren't they both paying the same thing twice a month? Are you slow? Did you read what you quoted? Twice a month = 24 payments. Semi-weekly = 26 payments. Or do all months have 28 days in your world?
Hardly slow, but you're so mistaken it's remarkable. Maybe I wasn't clear when stating they're both paying the same thing twice per period, and the same amount with each payment. It's the time periods I questioned.
Semi-weekly is paying TWICE A WEEK, bi-monthly is paying twice a month. I'll repeat it for you, a biweekly payment occurs every two weeks and a semiweekly one occurs twice a week.
So the posting above which said:The other concept is the semi-weekly payments, which is what the mailings you have received are offering. They are not trying to help you pay half of your monthly mortgage twice a month, rather they are trying to "help" you pay half of your mortgage payment every two weeks: 52 weeks/year divided by two = 26 payments of half your mortgage, or the equivalent of 13 mortgage payments every year, rather than the normal twelve. would leave a borrower in the pot.
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