We want to examine a popular payment plan for mortgages that you may have seen in the past few years - the bi-weekly mortgage plan!� As you will see, this plan is a total scam...and we will show you exactly why!

What Exactly is a Bi-weekly Mortgage Plan?
The bi-weekly concept is simple:� You make a mortgage payment every 2 weeks instead of making a payment every month.� You take whatever your�

monthly payment is and then cut it in half, and start making this half-payment every 2 weeks.� Because there are 52 weeks in a year,�you end up paying the equivalent of 13 monthly payments instead of 12 (26 bi-weekly payments which equate to 13 monthly payments).��

So, what are the benefits to you?� There are really only 2 main benefits:

• More Principal Paid - You end up paying 1 extra payment per year, which will means that you contribute more toward your principal.� This benefit is the most significant in terms of dollars.�� This translates into you being able to pay off the principal sooner...and thus cut the mortgage term.
• Lower Interest Charges - You are not only paying an extra payment per year...you are also paying more frequently.� So, because of your more frequent payments, the interest expense charged to you is slightly less, because the bank has their payment sooner than waiting for it every month.� This benefit is much smaller than the extra payments mentioned above...but any savings is good savings.

Sounds good?� It sounds good to us too, but....

The Problem with Bi-Weekly Plans?

• Setup Fee - Your lender will require an up front fee to set up the administration portion of the plan.� I have seen the charges range from $300 to $500 for this.� This fee is almost always charged.
• Per Transaction Processing Fee - This fee is charged for monthly servicing of the extra payments.� For example, a company might charge $2 for each bi-weekly payment.� This fee may or may not be charged.

While you do obtain the benefits that I mentioned above for this plan, there are some major problems with it.� First, the extra trouble that it will take for you to write a check every 2 weeks is a hassle (if you don't elect to do automatic withdrawals).� Second, you end up paying your lender to do something that you could easily do yourself!...You can duplicate the bi-weekly plan results without paying any of the setup and per transaction fees.

How Can I Duplicate the Bi-Weekly Plan?
It's really very simple.� Simply take your normal monthly payment and then divide it by 12. Take this amount and add it to your normal monthly payment.� Voila...you are now getting the same results as if you were on a bi-weekly payment plan.��

Let's look at an example:

Sam J. has 20 years left on his note, with an outstanding balance of $179,325, with an annual interest rate of 8%.� His normal monthly payment is $1,500.� He has decided to implement his own personal "bi-weekly" plan so that he can pay off his mortgage more quickly.� His new monthly payment will be $1,625 ($1,500 + ($1,500/12)).� If he makes this payment every month, he will duplicate the bi-weekly plan offered to him without having to pay anyone to "administer" the plan...as well as avoiding monthly payments.

But. does it really work...can it match the results that a bi-weekly plan would give to him?� Let's see the results:

As you can see, simply prepaying your mortgage every month, adding 1/12 of a payment on top of the normal payment, will give you almost exactly the same results as a bi-weekly payment plan...AND without paying having to pay the setup and monthly fees!��

WrapUp
So, basically, if you have the discipline to simply make your own payments, you can duplicate the results of the bi-weekly plan.� It's easy to do...and you will increase your net worth and your financial discipline...and see your mortgage debt paid down faster!��