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From: JT144@aol.com
Subject: (no subject)
Date: Wed, 9 Dec 1998 22:28:39 EST
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Doug Hewko writes:

>>Not true! I pay my mortgage to my trust company in biweekly payments without
any fees! <<

Every solicitation that I have seen from banks offering conversion of monthly
loans to a bi-weekly schedule requires a substantial fee of hundreds of
dollars. Some require transfer fees as well.  Each "Mortgage Consultant" I
have investigated offers an escrow scheme costing hundreds of dollars plus
transfer fees.  Either you have a true bi-weekly loan to begin with or your
lender is simply collecting two of your half payments to make one normal
monthly payment.  Request an amortization schedule from your lender for the
last year and see how many times principle was deducted from the outstanding
balance.

>> 
 All banks and trust companies will handle bi-weekly payments without
fees....you could even make weekly payments if you wanted!!! <<

Your lender may accept your 1/2 payments every two weeks, but that does'nt
magically change your amortization from monthly to bi-weekly.  Only a change
to your mortgage contract can do that.  Your lender is required by law to
abide by the terms of your mortgage contract.  If it was created as a monthly
loan, paying 1/2 your payment every two weeks will not change it to a
biweekly. Most likely, your lender is simply making a prepayment with the two
excess payments they get per year.  Better check with your lender to see what
they do with undesignated payments.  Many contracts state that undesignated
payments get applied to interest, late fees or escrow balances, not principle.

>> And Quicken 98 handles bi-weekly payments, although I still have to make
 adjustments to the interest paid every 6 months when I get my statement.
 Quicken uses the wrong interest calculation......but in 6 months it is off
 by about $10 in my principle, so it's not a big problem for the short run.<<

In my opinion, having written amortization software for windows, most programs
contain flaws which introduce subtle errors into the calculations.  There are
at least two common errors I find in the majority of programs and web sites
that try to do mortgages.  These errors render the program useless for
auditing purposes.  Many are close, very few are exact.  When it comes to
mortgages, a miss is as good as a mile.  Bad software is a BIG problem. A $10
error in six months is a HUGE error for any amortization program.  While I
don't care for quickens' mortgage module, I have not seen an error of that
magnitude in quicken. But then again, I refuse to use quicken for mortgages.
Though, to be fair, quicken does do a good job with my checkbook.  I find it
intriuging that you compensate every six months...

Those of us who prepay need to ensure that the lender has correctly applied
the prepayments and follows through on the new amortization.  I have
personally caught my lender making six mistakes on my fixed rate loan that
would have cost me $6,000.00.  I was able to tell tham what they did wrong and
what they needed to do to fix it. To the penny.  Bad software compounds the
problem.  Since companies that audit mortgages report an error rate of about
33%, accuracy is essential for those who want to audit their loans and ensure
maximum savings from their prepayments.
 
>> The only suckers out there are those who don't take advantage of weekly or
 bi-weekly payments. >>

The only "suckers" are those who think they will get something for nothing.
Believe it or not, there are those who KNOW that true biweeklies offer no
significant advantage over a monthly loan. An advantage that is less than 1%.
There are those who KNOW that pseudo bi-weekly escrow "scams" can cause you to
forfeit thousands you could have otherwise saved yourself.

JT144@aol.com



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