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How Can You Get the Effect of Bi-Weekly Payments Without the Middleman?
Manage episode 171430536 series 1315561
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Today you'll learn about an alternative to making bi-weekly mortgage payments that will save you money and achieve the same effect of making an extra payment every year.
We often get questions from clients asking about bi-weekly payment options.
The fact is, once you close on a transaction, you're going to get inundated with junk mail, much of which will be requests for you to sign up for a bi-weekly payment option. This means that instead of paying your mortgage once a month, you'd pay twice a month.
With this plan, you get the same effect as bi-weekly payments without the middle man and their fee.
The reality of working with these companies, though, is that you'll pay them a month in advance. Then, you'll pay every two weeks, and in turn, they will pay your lender once a month. This will continue until they've built up enough reserves in the escrow account they've set up for you to make that 13th payment a year.
I advise my clients to take that monthly payment you're paying to your lender each month, divide it by 12, and add that amount to what you pay every single month. This results in a 13th payment being made every year. It's exactly the same as the bi-weekly payment plan, with the only difference being that by doing it yourself, you cut out the middleman—and their fee.
If you have any questions about this payment plan, don't hesitate to give me a call or send me an email. I'd be honored to help!
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