Is there an official definition of biweekly mortgage payments versus semimonthly and monthly?

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We just refinanced our home with our credit union and specifically asked for biweekly payments to pay off faster. They said it would be just a slighty higher interest rate. Biweekly is on our closing papers. Our first payment was made but our loan balance did not go down and our loan officer is claiming it is not really biweekly and they hold the payment and it reduces once a month. I think she’s full of shit, that is not what we signed up for and we made clear what we wanted before we applied for the loan and she agreed it could be done. There is no benefit for a slightly higher interest rate this way. She also messed up the first loan payment because it was supposed to be automically taken from our account. I think we have a dumb loan officer as we have never used her before.

I have had 3 car loans with this CU and never had these problems. Those were all biweekly and worked correctly with the loan balance lowering every 2 weeks so I know they know how to do this as biweekly

Which style of Mortgage Payments is better for a Homeowner,
1)Paying Biweekly
2)Lumpsome an Extra Payment once every Year
in 1) disadvantage is there is an extra 300$ for enrollment fees to be paid.
in 2) advantage is that you can pay as & when you have extra cash to pay.
Also, if you pay Extra payments than 2), to shorten your loan-length, is there any hidden disadvantage?
Ken, How can it be less empacting?
Again Clarifying part 1 of my question :
if I make one extra payment every year, at start of the year (towards Principal, of course)
How is this scene different from enrolling in Biweekly? (other than losing 300$ extra in enrollment fee)

4 Comments
  1. Reply
    HIGH SHAMAN
    February 17, 2011 at 8:14 pm

    I had a similar problem with my re fi also …. You really need to go to a real estate attorney as these things are very compliocated and can get very “Iffy” depending on the language of the contracts signed …

  2. Reply
    topwill2002
    February 17, 2011 at 8:40 pm

    I would recommend ANY amount you pay extra in the billing period is good and one extra a year applied to the principal. This reduces the amount in a compouding period.

    adam

  3. Reply
    Ken_Home_Loan_Coach_4U
    February 17, 2011 at 8:56 pm

    Saving money (i.e. paying less interest to a bank) is never a disadvantage. If you can afford to pay bi-weekly I select this method you will save additional interest. If you simply make one payment extra per year you will save interest and shorten your mortgage length but it will be slightly less empactful than a bi-weekly payment plan.

  4. Reply
    $$$money$$$
    February 17, 2011 at 9:04 pm

    I myself use the biweekly payment system as well as make extra payments. I suggest you go with biweekly if you are sure you will have the money in your acct. It actually turns out by paying biweekly one of your payments out of a year will go towards principle. But check with your mortgage company to make sure. On top of that you can also make extra payment to really shorten the life of the loan.

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