Conference nyoss1::market_investing

> The letter
> further states that unless I have my mortgage setup and pay
> for the biweekly service I am not allowed to send more than
> one check per month.

	Assuming you correctly read the letter ...

	This is bull.  It used to be legal to not allow "prepayments"
	but that is basically illegal now.  I'd send a copy of that letter
	to your State's appropriate agency (and maybe Cc the attorny general),
	and even faster if I were you I'd refinance ASAP and take advantage
	of the lowest mortgage interest rates in over a year and a half.

	... however you may of mis-read the letter.  What they may not
	be allowing is to write two checks to pay a single months payment
	(ex. if you monthly payment is $1,000, then they won't accept
	two $500 checks for a given month).  This is different from
	paying the monthly payment and then making additional principal
	only payments.

	Also from what I've read, for the lender to charge you additional
	fees to setup/manage bi-weekly payments is a scam.  Usually
	setting up bi-weekly payments involves setting up automatic
	debits (EFT, Electronic Funds Transfer) from your checking account.
	This actually saves the lender money as it reduces paperwork
	to handle by mail payments.

	And lastely I believe bi-weekly payments equates to the same
	thing as making monthly payments and then once a year making
	one additional principle only payment.  Don't let a third
	party charge you extra money to provide bi-weekly payments
	(this equates to no more than those 3rd parties who for a fee
	will request for you government services that are free, such
	as your social security account information).

	BTW, there are a few topics on bi-weekly payment plans in
	the Real Estate conference.

Send in one check per month that includes the extra principal.  This will give
you the advantage of an accelerated payoff without paying a fee (which is
indeed a ripoff).  It also gives you the flexibility to change the amount of
extra principal depending on your circumstances.  Indicate on the coupon or
stub that you want the additional amount applied to principal, or if there's
no coupon or stub, include a note to that effect.  Otherwise, they'll apply
it to escrow.

I got a similar letter from my mortgage holder. My understanding of this is:

Interest savings is more than just the equiv of one additional payment per 
year...the earlier payments also reduce the outstanding principal MUCH more 
quickly.

My lender wants a $350 set up fee (this is NOT a third-party), and yes, there 
is then an EFT every two weeks. Forecasted savings in my case knocks 10 years 
off my 30 yr note, savings of $100k.

In my case, tho, I'll pass. I'd rather have some flexibility in making add'l 
principal payments. Current plan is to prepay $2k each yr in single payment.

And, while I won't profess to know the appliocable law, there are probably 
provisions allowing a mortgage holder to limit the frequency of additional 
principal-only payments. Once a month doesn't seem unreasonable, given the 
probable costs to a lender of processing such a payment and recalcing & 
maintaining a revised amortization schedule.

SteveS

> Forecasted savings in my case knocks 10 years 
> off my 30 yr note, savings of $100k.

	Do note however that your actual savings is actually less than
	that (assuming fixed rate mortgage) because future payments are
	in tommorows dollars that are worth less and less each year
	(due to inflation).

> And, while I won't profess to know the appliocable law, there are probably 
> provisions allowing a mortgage holder to limit the frequency of additional 
> principal-only payments. Once a month doesn't seem unreasonable, given the 
> probable costs to a lender of processing such a payment and recalcing & 
> maintaining a revised amortization schedule.

	I disagree.  And BTW, the cost to re-calcuate is nil thanks to
	computers.  The biggest costs would be opening the mail, data
	entry, and processing the check.

> Interest savings is more than just the equiv of one additional payment per 
> year...the earlier payments also reduce the outstanding principal MUCH more 
> quickly.

Lets say that your monthly payment is now $1200.  Under a bi-weekly scheme
you would pay $600 every two weeks.  Since there are 52 weeks in a year,
you would pay $15,600 per year, as opposed to $14,4000 per year.  The
savings from a bi-weekly mortgage plan comes from two places:

    1.  You are paying off more of your principal than you do in a monthly
        mortgage plan.  In the example, you are paying an extra $1200 per
        year in principal.  

    2.  You are paying off principal earlier in the month than in a monthly
        plan.

Item one has, by far, the largest effect.  The effect of item 2 is very
small.  This was discussed elsewhere and someone did the calculations and
found that if one were mailing half payments twice per month and being
credited with these payments twice per month the mailing cost would be
greater than the savings from paying off part of the principal two weeks
earlier.  

Instead of paying $350 for the privilege of a bi-weekly scheme, add $100 to
your monthly payment of $1200.  If you do automatic payment of your
mortgage from your bank account, you may be able to set this extra payment
up for free.  I was able to for one of my past mortgages.

                    
                                    August G. Reinig

Banks and Morgage lenders charging $300 to $400 setup fees
to convert your loan to bi-weekly is a rip-off. There is 
a glut of lenders making these offers recently. They all
must of attended the same "How to increase revenue" 
training course recently. Do what the others have 
recommended. 

A bi-weekly nets out to 13 monthly payments over a 
12 month period. Just add 1/12 of your monthly payment
as additional principle on your payment coupon each 
month. Start by applying the $379.00 your bank wants:-)
P.S. next time you re-finance choose a different bank.

    
    > They all must of attended the same "How to increase revenue" training 
    > course recently. 
    
    Since I did not respond to the mail solicitation, a guy calls me up one
    morning last week and says "we have not received your mail" as if to
    suggest that "if you don't see it our way, you are an idiot." Talk
    about 'get into "pressure-sale" mode in 3 seconds!  I was in a hurry
    and this guy would not hangup.  I had to in the end (I am not normally
    that nasty).  The bank is a big and respected one that I had not had
    any problem in five years and am inclined to believe that they may have
    sold this aspect of their mortgage business (the letter had their 
    company logo) to outside marketing firm.
    
    > Do what the others have recommended. 

    Yes indeed.  Thanks to all who replied!
    
    Dan

>   and this guy would not hangup.  I had to in the end (I am not normally
>   that nasty).  The bank is a big and respected one that I had not had
    
    You are too kind. I mean that. It's OK to hang up on someone who tries
    to solicit you over the phone. Ignore the fact that they're talking,
    say "not interested" and hang up immediately. The person on
    the other end gets the point and is not going to waste more time by 
    calling you back.
    
      John

    It's kind to hang up quickly on these guys.  They have a quota and the
    less time they spend with a no sale, the better for them.
    
    As soon as you determine that you are not interested, say,
    
        "Sorry, I'm not interested"
    
    and hang up.  Don't wait for them to pause or acknowledge your
    statement.  Don't yell, or slam the phone.  Just make the statement
    calmly and hang up.
    
    				    August

    Yeah, when I feel really annoyed and nasty, my response is to drag the
    call out for as long as possible, so they can't meet their call quota.
    
    One tactic; get them thinking you're interested, then put them on hold.
    
    Dave

The magic incantation, at least in the US, is:

	Place this name and number on your "Do-not-call" list.

In response to harrasing calls from telemarketers, the FTC passed a rule
several years ago that callers must honor these instructions or face federal
sanctions.  Don't say "Please," or "Would You," or any other honorific as that
gives the telemarketer the option of not following your "suggestion" rather
than your "instructions."

I've had several telemarketers get huffy and nasty, but none has ever called
back.  

One telemarketer -- a long-distance telephone company -- said they would do
that and asked if they could read me a statement that said they would never
bother me again and did I understand that I would have to call them in the
future if I wanted to do business with them?  They then asked for other names
and numbers at the household to be added to their Do-not-call lists as well. 
That particular telemarketer has not called back either.

BobW

PS, I have two sequential phone numbers in my house.  As soon as I get done
with a telemarketer, "line 2" rings and is answered by my modem -- no more
calls there, either.

    This has to be the best piece of information I've gotten from a notes
    file this quarter! Thanks, Bob!
    			Jim B.