Bi-weekly mortgage payments

I recently received a letter from ciitmortgage about changing my payments to bi-weekly. It says that if I change to this plan I will pay off my mortgage 6 years, 10 months early saving $132,339. So now how does this work if I don't plan to stay in this house for longer than like 10 years? Does it still make sense for me to enroll in this plan? There is an enrollment fee of $375 and $1.50 fee each transaction. What if I just chose to pay my mortgage bi weekly on my own anyway without them taking the money out of my account? Wouldn't that be the same as the plan except I wouldn't pay the 350 enrollment fee? I pay my mortgage online anyway each month. What do you think?

Message edited 7/15/2008 3:45:40 PM.

Re: Bi-weekly mortgage payments

Does your mortgage have a penalty for paying extra mortgage payments? If not, you could do the extra payments on your own, and avoid all those fees.

Re: Bi-weekly mortgage payments

the only reason I would suggest setting it up this way

is b/c 99% of people say they are going to make bi-weekly or 1 extra payment a year on there mortgage- and they don't

also- some banks don't process the extra payment if you just send it-

you should talk to Citibank

but the savings of doing a bi-weekly payment are HUGE

as far as not staying in the house longer then 10 year- it would still benefit you - more money would be going towards the principle

ETA- In the book Automatic Millionaire by David Bach- he has a great chapter on this- that's were I read that the 99% of the people that want to do this don't

the book is all about making things automatic- so they just happen with out thinking

you can have the best intentions of sending the extra money- or putting the money into your IRA etc- but when it's set up to just happen- nothing gets in the way

it's a great book

Message edited 7/15/2008 4:01:54 PM.

Re: Bi-weekly mortgage payments

Re: Bi-weekly mortgage payments

As long as there is no penalty for paying early, I would just divide the extra amount by 12 and add it to your monthly mortgage payment. You can have it set up so the excess goes to the prinicple.

Re: Bi-weekly mortgage payments

Even if you don't plan on staying in the house that long, it does make sense to either do bi-weekly payments or an extra payment each year (which is essentially what bi-weekly comes out to). The extra payment is applied directly to your principal which builds the equity in your home.

We looked into it and decided the fees weren't worth it for us so we make one extra payment a year in March when we get our tax return and I get my bonus.

Re: Bi-weekly mortgage payments

I make 1/12 of a payment every month. If you are going to do it on your own and stick to it then I wouldn't pay the fees associated with it. In NY if you make any additional monies to your account it shoudl go to principal but to be on the safe side I always put in the memo line $189 to principal to ensure that is where it goes.

I just transfer it from my bank account to my mortgage company through my bank's bill pay feature.

If you do bi-weekly it is the same as taking your montly mortgage payment and dividing by 12 and then making that additional amount every month. It is automatic for me to send them the additional monies every month.

Message edited 7/15/2008 5:26:45 PM.

Re: Bi-weekly mortgage payments

Message edited 7/15/2008 6:28:34 PM.

Re: Bi-weekly mortgage payments

Re: Bi-weekly mortgage payments

I agree, do it in a way that you dont pay a fee.

I have my automatic payments set up to pay more than my regular payment

Re: Bi-weekly mortgage payments

I looked into it and was annoyed that they charge a fee for it. We do however, round up and throw it to interest and it coems out to an extra payment a year. It does help.

Re: Bi-weekly mortgage payments

We round up a certain amount and put that extra money towards the principle. We've done this every month since month one... we never even look at the banks figure, just the amount we pay.

When we were shopping for mortgages the 30 year rate was lower than the 15 however, the extra principle we apply is an amount that will pay off the mortgage in 15 years versus 30.

Re: Bi-weekly mortgage payments

It may be a great book but if he supports paying a fee to set up bi-weekly payments that's HORRIBLE advice by that author.

You should never pay any fee to set up bi-weekly payments. It's a ridiculous bank charge. Trying to justify paying a horrendous fee with the idea that "well you wouldn't do it anyways" is just crazy. I wouldn't do this if the bank wanted $50... nevermind $350.

Here is a good link that tells you why you shouldn't pay for bi-weekly

Make your extra payment a year, adjust your automatic monthly payment with the bank, or send in a payment at the end of the year, all better NO FEE options.



I don't really think Beth ever said that the book supports paying a fee for automatic payments.

She was just saying that the book says, most people say that they'll pay the extra, but the majority of the time, they don't make the extra payment. That's why automatic payments are better.

I think it's great advice to set up automatic payments. But, maybe you should just set up the extra payment on your own, so that there's no fee.

Do like other pp's have said. Take your payment, and divide it by 12. Pay that much extra (or more if you can) towards principal every month. It will get your loan paid off in less time as well.


exactly- David Bach's point is that most people have the best intentions to pay every 2 weeks and don't


$350 is a small price to pay if that is the only way your bank will let you do it- if you are saving over $100K in interest- what is $350 over the course of the loan

not every bank let's you do it on your own- of course they want to make the fee on it

but in the long road you are still way ahead of the game

David Bach- far from horrible advice

Message edited 7/15/2008 9:36:33 PM.

Re: Bi-weekly mortgage payments

We pay bi weekly. There was no setup fee.
I'm not financnially savy (so there could be a better way of doing this), but our bi weekly payments, plus paying a few hundred bucks over what our payment is (bi weekly) gives us 3 extra payments a year.
We keep trying to increase the extra payment but our taxes keep going up!

Re: Bi-weekly mortgage payments

We do bi-weekly. Our 30 year mortgage will be paid off in 21 years. Actually 20 now that we've been here for a year.

Re: Bi-weekly mortgage payments

Posted by JRG71

We pay bi weekly. There was no setup fee.
I'm not financnially savy (so there could be a better way of doing this), but our bi weekly payments, plus paying a few hundred bucks over what our payment is (bi weekly) gives us 3 extra payments a year.
We keep trying to increase the extra payment but our taxes keep going up!

Re: Bi-weekly mortgage payments

Re: Bi-weekly mortgage payments

I am not disagreeing with you

but it's a proven fact that most people to not have the discipline to set it up themselves - it's a 20 year process- let's be realistic

or everyone would do it then companies like this would not exsist

they even do it on car payments now- and even I said I was going to make an extra payment on my DH car this year

have I? No and the car is 18 months old

we had the mustang he totalled set up this way b/c it was super expensive- and would were going to save $15K in interest over the life of the loan

I really don't regret spending the $200 to set the car loan up that way

and if I set up my mortgage that way and actually paid it off early- I doubt I would regret doing it

Message edited 7/16/2008 11:53:45 AM.

Re: Bi-weekly mortgage payments

Re: Bi-weekly mortgage payments

I am not recommeding anything - I am posting my opinion-

My opinion is based on a fact from book I read - that 99% of people say they want to do this- and know they should- but don't

I didn't know people listened to everything I said

I would hope people can do it on their own- but if they can't - which I am not even sure I could- I would take advantage of a company that could force me to do it

Message edited 7/16/2008 1:05:43 PM.

Re: Bi-weekly mortgage payments

just send in the payments on your own every other week, you shouldn't pay any fees!!! it's a gimmick, you could easily do it on your own and not pay anything with the same result in the end.