When shopping for a mortgage a true Mortgage Professional should ask you what your plans are for your mortgage.  Are you looking short term or long term?  Is your goal to pay down quickly on your mortgage?

If you decide that you are looking, long term and one of your goals is to pay down on your mortgage quickly a bi-weeklypayment maybe for you.  Please keep in mind if you choose this option you will also have to allow the lender to set up an auto pay out of your accounts.  Every other Monday half of your payment would be coming out of your account. However,  what does this really mean?

One of the most important questions you should really ask is does your lender offer a true amortization of a bi-weekly payment.  This is a very important question.  What you are asking them is do they place the payment as soon as they receive it or once a month when they receive both payments.  Sounds simply right?  However you would be amazed at how many "Mortgage Professionals" don't know.  They have just been trained to tell you bi-weekly pays down your mortgage quickly. 

If you choose bi-weekly and the lender does not amortize it this is not a bad thing either.  What you have to keep in mind is by choosing this option you are really just adding one extra payment a year. If your goal is to pay off your mortgage quickly this truly does work by almost knocking off 8 years of payments. In addition if you find a lender that does offer a true bi-weekly payment you can knock of an additional 4 years. 

I was speaking to my sister last week when she told me that they send extra money every month to help pay down their mortgage.  She asked me if I thought this was a good idea or should she go bi-weekly.(She does not like the idea of auto pay which is mandatory when chosing this option)  I asked her how much does she send to the lender.  Her answer was the amount of one extra payment a year divided by 12.  So at the end, they really are making one extra payment a year. 

As I stated early some lenders only amortize once a month so this would be the same thing as a bi-weekly payment.

My advice to my sister was to call the lender direct and ask them if they truly place the payment towards the mortgage or do they wait until they receive both payments.  Her response from the lender (sadly) was typical.  The person on the other end on the phones response was "HUH?"  Oh yeah, yeah sure it counts. My sister is highly educated and she did not just fall off the turnip truck so she asked to speak to a supervisor.  Thankfully,  the supervisor she spoke to understood and knew the answer.  No they only amortize once a month so by sending extra money with her payment every month she is doing the same thing as a bi-weekly payment and keeping control of her money.

So what this comes down is do you want control of your checking account or are you disciplined to send extra money every month and have an option not if money gets tight.  Yes,  you can always cancel the auto pay but it is not always immediate.

Word of warning before you choose the option of paying down quickly your mortgage my advice is to speak to your CPA first.  You might be loosing a great tax savings by doing this.

For more Mortgage Advice:  Mortgage Advice in South Florida