Author Topic: Equity Plus Bi-Weekly Mortgage Program  (Read 17695 times)

PAB

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Equity Plus Bi-Weekly Mortgage Program
« on: June 11, 2015, 11:33:04 AM »
Hi everyone,

So I got this advertisement from Equity Plus.  They offer Bi-Weekly and even weekly mortgage programs.  The idea is that this helps to reduce the over duration of the loan. 

Anyway, my question is: Is Equity Plus a trustworthy company?  Has anyone dealt with them for their mortgage?  Are there other companies who offer the same type of service? 

If this has been addressed, would someone direct me?

Thanks for your help,
Paul

dandarc

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Re: Equity Plus Bi-Weekly Mortgage Program
« Reply #1 on: June 11, 2015, 11:46:32 AM »
As long as it is free, if you want to do this more power to you.

The vast majority of the shorter duration comes almost entirely from the fact that you're sending in an extra month's payment every year.  Usually on a bi-weekly program, you send in half a payment every other week.  So in 4 weeks, you've sent your total monthly payment.  52 weeks / 4 = 13 monthly payment's per year.

So yeah, you could do this just by sending in an extra payment once per year marked "apply to principal" - this is nothing to pay any extra fees for.

dandarc

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Re: Equity Plus Bi-Weekly Mortgage Program
« Reply #2 on: June 11, 2015, 11:49:30 AM »
https://equityplus.net/HowItWorks.aspx

Indicates this particular company is honest about how it works.  However, this sentence means I wouldn't use this program:

Quote
Equity Plus will collect one-half of the regular monthly payment plus a small transfer fee every other Friday timed along with you pay cycle.

Another Reader

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Re: Equity Plus Bi-Weekly Mortgage Program
« Reply #3 on: June 11, 2015, 11:56:11 AM »
Do NOT do this.  You are entrusting a third party to make payments on your behalf and paying them a fee to do that.  Your lender probably offers the same program at a lower cost, and there is no danger of the payment not being made if they handle the payments.

You can easily accomplish the same thing at no cost.  Essentially, you are making an extra mortgage payment every year that goes to principal (26 bi-weekly payments equals 13 monthly payments).  Divide your mortgage payment by 12 and add the result to your monthly payment and you will accomplish the same result.

charis

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Re: Equity Plus Bi-Weekly Mortgage Program
« Reply #4 on: June 11, 2015, 12:15:15 PM »
If this is something you really want, have you tried contacting your mortgage lender and seeing if you can just make bi-weekly payments?  My bank offers this if you have a checking account with them and pay the mortgage out of that account.  But I agree with that you can just do this yourself by sending in the extra payment.

Ricksun

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Re: Equity Plus Bi-Weekly Mortgage Program
« Reply #5 on: June 11, 2015, 12:29:55 PM »
The vast majority of these programs are marketed as "helping" the consumers, but are in fact huge money makers for the companies that offer them with almost no risk.

1. They generally charge an initial or set up fee in the ~$100-$400 dollar range to pay for the account to be opened and maintained;
2. Some charge a small fee with each payment you make to them, or payment they make to your loan servicer. $5-$25 each to pay for the processing costs;
3(a). Most mortgage companies will ONLY accept 1 monthly payment to cut down on processing costs.  These middle man companies (and many times the banks themselves when they offer the service), do not apply the excess payment to your account.  Your excess money sits in a holding account until you have enough for the full extra payment.  They generally wait until the end of the year to make a "double" payment with all of the money they have collected from you; 
3(b). In the interim, the service provider is making interest money off of your investment.

Mathematically, it's ALWAYS better to make the extra principal payments yourself as part of your monthly payments, whether its when you have the extra paycheck that month, or just an average of an extra payment (1/12 additional each month) each year.

These services are geared towards the people who 1) are lured by the marketing and don't read the fine print, or 2) can't prevent themselves from spending every penny in their account and need someone to manage their extra payment.

Rick

shotgunwilly

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Re: Equity Plus Bi-Weekly Mortgage Program
« Reply #6 on: June 11, 2015, 12:32:36 PM »
You can EASILY do the same thing yourself by setting up bill pay with your bank.  Set a recurring bi-weekly payment to be sent to your mortgage company.  No fee, and the exact same thing.

PAB

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Re: Equity Plus Bi-Weekly Mortgage Program
« Reply #7 on: June 11, 2015, 01:12:58 PM »
Hi everyone,

Thanks for the fast replies. 

I was suspicious of the advertisement, thanks for confirming my doubts.  I'm definitely going to avoid that one and just keep making additional principal payments. 

Paul