Did you know that many mortgage companies do not offer mortgage acceleration programs providing you the opportunity to pay off your mortgage quicker and build your equity faster at no additional monthly expense to you? Reading the fine print indicates some programs require a monthly fee and typically a onetime application fee. The programs allow you to make bi-weekly payments instead of monthly payments. The programs appear as though you make half the monthly payment twice a month for a total of 24 payments in the year as opposed to 12 monthly payments. Actually, you are making one extra monthly payment spread throughout the year. There are 52 weeks in the year, which divided by 2 is 26. Thus you will be making 26 payments, instead of 24 which results in an extra 2 payments for the year. The result is an 8.33% increase in payments for the year which you may not have anticipated. If you can't afford the extra payments, then don't do so. Although, if you can afford the increase, then do so because you will benefit greatly by paying your mortgage quicker and thus paying less interest.

     Some mortgage companies offering the bi-weekly program will not apply your extra payments to the principal of the loan when the payment is received. Instead, they will keep the money for themselves until the first of the month and then apply the extra payment. Other companies will keep the money for several months before applying it to the loan balance. Some will also not reamortize the loan after payment is received. Instead, the amortization schedule showing the amount of principal and interest applied will be the same for the life of the loan. Look for a mortgage company who will apply the mortgage payment immediately and reamortize the loan so as to ensure future payments will have less applied to interest and more applied to principal which can save years on the time it takes to pay off a mortgage.

     A good measure for comparing different mortgage company's mortgage acceleration program is to compare the amount of time that will be saved and the amount of total interest saved over the life of the loan. Pick the one which provides the means to pay the less total interest.


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