Posted by Tom (GA) on October 19, 2003 at 15:46:56:
Great work, detective. I know I don’t have to pay for this service. I was just showing how this particular lender was running their game using the numbers as presented for my circumstances, with them being a large bank.
They try to make it seem as if all you have to pay is the $49 enrollment fee, when you actually pay thousands of dollars.
Back to your statement: How does paying half early and the other half when due cut down interest by 25%? I thought it took an additional payment per year applied directly to principal to do this. What am I missing. Does this accelerate your equity as well?
Posted by Tom (GA) on October 19, 2003 at 09:46:18:
Looks like the big banks are are getting in on the scam.
I received a “special offer” from the lender on my personal residence to reduce the total interest I will pay and to pay off my loan 6 years and 8 months earlier ( I refi’d a couple of months ago.)
My current payment is $1011/mo ($12,132/yr)
New payment will be $510 every 2 weeks ($13,260/yr)
With the plan I will save $37,727 in interest paid.
With the plan I will pay an extra $1128/yr.
Over the course of the remaining time (23 yr 1 mo) I will pay about $26,030 for a an actual savings of $11,697.
So I get to pay about $43 every other week for this priveledge based on the $1128 a yr increase. And don’t forget the small print about the $49 enrollment fee.
Oh, and I save $10 off this months’ payment. Yippeeee!
And to think of the people who don’t know any better and fall for this crap.
Re: Equity Accelerator Program - Posted by Brent_IL
Posted by Brent_IL on October 19, 2003 at 22:05:30:
Yeah, all of this is true, but you?re looking at it from the vantage point of your financial background.
I?m convinced that a majority of homeowners would fare better by accepting this offer. It?s the difference between a put-in-and-take-out savings account and a mandatory one where the deposit stays put. In all likelihood, the average guy couldn?t invest $43 every other week and net an after-tax rate of return higher than their mortgage rate anyway.
Re: Equity Accelerator Program - Posted by timeinvestor
Posted by timeinvestor on October 19, 2003 at 12:49:13:
ok, ready?
YOU DO NOT NEED TO PAY A SERVICE FOR THIS!
Make half of your mortgage payment to the mortgage company 15 days EARLY, then pay the other half on the due date every month. No fees, not 26 payments(every 2 weeks), and still cut the interest down by approxiamately 25%.
Sometimes the lender will not accept two payments in a month. There was a poster in another forum that had trouble with that method. The general response was that it’s extra paperwork to do this and to just pay more that month than sending in two payments. It typically depends on the lenders’ policies.