Do I need lender approval to send in payments biweekly instead of monthly?

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I’m in the process of buying a home at the moment. The Good Faith that I received from the lender indicated no prepayment penalties on the loan. I currently pay my car payments biweekly, because that’s how I get paid and it saves money on interest. I’ve heard of biweekly payment plan mortgages but do I need to get “approval” from the lender to send in two payments a month instead of one? On my car payments, I am on a monthly payment plan but I pay them twice a month and they have never had a problem with it or asked me to go on any sort of “plan”.

We bought our first house almost a year ago. Shortly after moving into our new house, we received a letter in the mail from our mortgage company telling us about this equity accelerator program that they refer their customers to in order to save interest on the loan and pay our house off 6-8 years earlier. Our mortgage total is $ 1061 a month with all taxes and insurance included. We ended up signing up for this program last summer and we have been doing biweekly payments ever since, with one extra payment a year. We are now wondering if this is really worth doing and are thinking about canceling the equity accelerator program and just going back to doing regular monthly payments directly through our mortgage company like we did in the very beginning. Would this be a smart thing to do, or should we stay in this program?

  1. Reply
    Real Estate Guy
    April 29, 2011 at 9:29 pm

    The lender has a form you fill out. It’s usually at the settlement.

  2. Reply
    April 29, 2011 at 10:19 pm

    usually mortgage companies recommend, or at least bring that up to the home owner @ closing- I know ours did each time… They will love it either way , to get more $ $ monthly in their bank..and also so when your home is paid off faster, it gives us more equity I thin.which thenm we’ll be looking for another loan from them when we haveto refi to some home project down always something (project)being a home owner.

    If its an auto ach debit, yes they will need to know ,. cuz of the with drawel..but ..but..make sure the extra is going towards the principal… we have had auto notes & paying more $ $ each month.they were just taking off total..and just wud allow us to NOT pay months, instead of applying more towards principal. make sure you get it in writing..and most financial comp will allow you to ask yrly for reconciliation/breakdown of pymnts. good luck .

  3. Reply
    April 29, 2011 at 10:42 pm

    No lender approval is needed. Your lender needs to know that the extra payment goes towards principal and not tax escrow. That should be noted on the check.

  4. Reply
    Quicken Loans
    April 29, 2011 at 11:42 pm

    Those plans are usually for people who want to schedule their payments to be withdrawn automatically. There should be no problem at all if you want to set yourself on your own bi-weekly plan. For safety’s sake, if/when you send extra payments, make sure you indicate they are to be applied to the principal, not escrow or anything else. Hope this helps!

  5. Reply
    April 29, 2011 at 11:45 pm

    If you send your first bi-weekly payment in before your actual payment is due, it might be okay. The mortgage companies have programs for bi-weekly payments, mine offers an equity accelerator program and they charge a fee. I would try it one month and see what happens. I wouldn’t ask it be toward principle though, then you would still have a full payment due on the due date.

  6. Reply
    Free Thinker
    April 30, 2011 at 12:44 am

    What you need to see is an amortization chart that reflects how your accelerated program has effected your principle and your interest amounts. That will tell you if it is worth it. My thoughts are that it is a positive thing to do but I don’t know all the details involved.

  7. Reply
    April 30, 2011 at 1:34 am

    If you intend to stay in this house for a very long time, it makes sense to pay off early. You don’t need to go through the program, though. You can either make payments such as $ 1100 each month and apply the extra to principal, or make the annual payments yourself. This way if you get into trouble, you can go back to the normal amounts easily.

    Bankrate has a cool calculator to help you decide.

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