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December 19, 2010

Don’t pay a fee to enroll in a biweekly mortgage.

Whether making extra payments or paying off a mortgage early, like most financial decisions, depend on the particular circumstances.  If it fits your particular situation check with your financial institution holding your mortgage before making the payment.  Do not assume how they will handle extra payments.  Some financial institutions hold the extra payments and apply them to the extent of the scheduled payments as the payments come due.  This will not result in the intended result.  You may need to send a letter with each payment directing them to apply it to the principal.  Follow-up and check how they applied the payment.
If you read the attached article you will note that generally there is no reason to pay a fee.  It goes without saying that normally you should not borrow to make extra payments, especially if you are incurring a higher interest rate.

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