Bi-weekly payment programs are being used as trendy advertising for some mortgage companies.  Isn’t it interesting how advertising can make old mortgage products seem shiny and new?

We cannot help but be amused at how many old mortgage ideas have been polished up as new mortgage products!  Recently, even clients have mentioned the shiny new concepts of Bi-weekly mortgage payments. So, let’s take a look at this idea.

Palm State Mortgage offers expert options

Bi-weekly Payment Programs and Mortgage Advice Found In T.V. Advertisements –Seriously?

Bi-weekly Mortgage Payments

For example, viewers and visitors might get very enthusiastic about paying off a mortgage more quickly than the normal rate requires.  This seems like an admirable idea.  We know that interest consumes a lot of time and dollars.  Why not contribute a little more money for a little less time?

This is termed a Bi-weekly mortgage program, which in itself is a misnomer.  Grammatically, Bi-weekly usually means twice a week, but in this case it refers to making “a one-half payment every other week instead of a full payment every month.”

So, Palm State Mortgage breaks this down  in more realistic language:

1.  You will be making 13 payments each year.

2.  You will accelerate the payoff schedule of the loan.

3.  The loan will be paid off in 6 years less time.

Again, this does not sound like a bad idea, but is it really optimal or even ethical, to advertise it as a cheaper, faster way to own your home?

This concept and the dilemma i instills will require a two-part blog for clarity.

Do Bi-Weekly Mortgages Work As Advertised?

Given that today’s mortgage rates are low, does the extra payment program make mathematic sense? http://themortgagereports.com/14919/current-mortgage-rates-today

Bi-Weekly Payments Vs. Refi-Loan

Let’s image an old fashioned balance scale to look at a couple of mortgage options:

Option A, on one side of the scale:  Presenting the “new” 13 month payment commitment to a program.

Option B, on the other side of the scale:  Presenting some logical advice–You might discover that you could save more money by refinancing into a lower cost loan.  Simpler. More Direct. Easier to Remember.  “Option B” might be just might be more profitable than making a commitment to a program requiring, basically, an extra payment per year.

At Palm State Mortgage, we believe that understanding your alternatives, options and choices in any mortgage commitment is the first step to becoming a secure, happy homeowner.

Before The Bi-Weekly Option, Understand the Average Option

Palm State challenges myth of 13 month payment program.

Options for your Mortgage Payment Plan Program are Available.

Mortgage 101 requires:

1 payment per month,

12 payments per year,

And with the typical 30 year fixed rate mortgage, you will pay the loan out in 360 payments.

This time-honored mortgage payment plan is neither good nor bad within itself. It’s a popular option, but you should take a look at your choices.

Thank you for reading this week’s blog, and before you decide for or against the 12 month or the Bi-weekly payment, see next week’s blog, Part 2 when we go into the “new” 13 month payment program idea in detail.