Can I Do My Own Biweekly

Instead of hiring a company to manage your bi-weekly payment, you could accomplish essentially the same thing on your own for free. Just take your monthly payment, divide it by twelve, and add that amount to your monthly mortgage payment. Be sure to earmark it as a principal reduction. The first way you save is that you do not have to pay any fees to anyone. It's free. In addition to not paying fees -- using the same example as above -- your total savings on the mortgage would be $45,904. Plus the loan would be paid off three months quicker than with the bi-weekly mortgage. The reason you save more is because you are making a principal reduction each month, instead of waiting for funds to accumulate so that you can make one principal reduction a year.

The bi-weekly mortgage companies claim that homeowners are not disciplined enough to follow through with principal reduction plans on their own. They suggest the reason for setting up the bi-weekly mortgage enforces discipline upon you, and by doing so, they save you money. However, in this Internet age, banking on line and automatic deductions are readily available. You can set up your own automatic deductions including the additional principal reduction and have it go directly to your mortgage lender. Since the deduction occurs automatically, just like with the bi-weekly mortgages, self-discipline is not a problem.

Once again, you don't have to pay anyone to do it for you and you save even more money. You can do biweekly yourself for free. Why should you pay a company $400 needlessly? Actually, this is quite clever on the part of the mortgage companies; they have figured out a way to get more money out of their already existing, excellent customers. To accomplish the same thing yourself for free, select one of these two options:

• (Best for people who are paid every other week): Calculate 1/2 of your principal and interest payment. Send in that extra amount on the two months you receive three paychecks.
• (Best for people who are paid once a month or twice a month): Divide your principal and interest payment by 12. Send in that extra amount each month with your payment.