Posted by Dave T on December 24, 1998 at 14:53:08:
Save your money. This is just another bi-weekly loan program, and they want a $25 enrollment fee plus a $3.95 charge for every payment (could be 26 payments a year).
The sharply lower interest rate in their promotion refers to the effective interest rate, but there is no change to the actual interest rate. Under this program, you put additional money toward your principle balance each month, and shorten your loan term. If you make one extra mortgage payment each year, you turn your 30-year mortgage into a 22.8 year mortgage. With some neat calculator tricks, you can be convinced that the mortgage amortized over 22.8 years equates to a lower effective interest rate than the 30-year mortgage because of the savings in actual interest paid.
You do not need to enroll in any program to shorten your mortgage term and achieve the same results that this program promises. Simply take your monthly mortgage payment and divide it by 12. Now add that amount to your regular mortgage payment each month and designate that amount as an additional principle payment.