Just as "credit card protection services" provide a convenient way of notifying banks if your credit cards are lost or stolen, bi-weekly mortgage conversion programs provide only convenience, without any savings themselves. Yet many of the biggest banks and mortgage service companies are asking people to pay hundreds of dollars without giving them the whole story.If you have a mortgage on your home, you may soon receive an offer from your mortgage company to participate in a bi-weekly mortgage offering such as BiSaver.
Is it possible that your mortgage company is really trying to save you money? Or could they be looking for a way to increase the profits earned on your mortage? Which seems more likely?
Although biweekly mortgage programs promise to save thousands of dollars while paying off your mortgage years earlier, that savings is not a result of any kind of biweekly magic, but results from the compounded interest that you avoid paying by increasing the rate at which you repay your mortgage, something that most mortgage agreements allow you to do simply by sending additional funds along with a note asking that the extra amount be used to reduce your principal.
Two Payments a Month Can Rewrite the Cost of a Mortgage
(Bank Rate Monitor, 9/17/1998)
Financial Services Alerts
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