Are Biweekly Mortgage Payment Programs Necessary?

        After purchasing my first home I received numerous offers from mortgage lenders wanting me to participate in a biweekly mortgage payment program.  They promised to save me thousands of dollars; improve my credit; and reduce the years of my mortgage simply by converting my 30-year fixed mortgage to their mortgage program.  These promises captured my attention but promises are only as good as the character of the individual making them.  I needed to learn more about this program and what I found out allowed me to make a sound decision.

        I contacted one of the lenders and was informed that a biweekly mortgage is a mortgage paid every two weeks instead of once a month.  Since there are 52 weeks in a year,  26 payments or 13 months of payments are made.  This reduces the interest paid on the loan and reduces the term since additional payments are made each year.  This also improves credit by default.  Anyone who pays bills on time is improving his or her credit.  Now, knowing this information, I was ready to move forward.

        I made an appointment and was met by a sales agent.  The sales agent confirmed everything before mentioned and presented me with a contract.   All was well until it was explained to me that there is an enrollment fee of $695 plus a $9 processing fee for each payment.  I felt uncomfortable about this newly presented information and informed the agent that I needed additional time to think about it. 

        The following day, I contacted the bank where my current loan was originated.  I asked a loan officer to explain the biweekly mortgage payment program.  The loan officer informed me that enrollment with an outside agency is not necessary since most banks, including themselves, accept biweekly payments without any special enrollments or fees.   I then called my actual bank with the same concerns and was informed of the same information.  Now I'm comfortable.  I was able to set up a biweekly payment through the bank with no additional fees.