Q: We recently received a letter from our mortgage company (Chase Manhattan) about dividing our monthly payments into payments every two weeks which will supposedly result in decreasing our mortgage payments from 30 to 23 years.
Is this a legitimate proposition?
A: Yes. It’s called a bi-weekly mortgage. And if you don’t get charged extra for it, it’s fine. But often, companies will want you to pay $400 or more for doing this.
BTW, you can get the same result if you simply add 1/12 of your regular mortgage payment to your monthly mortgage payment. It’s called pre-paying and effectively you’re paying 1 extra mortgage payment a year to cut your loan by 7 years.