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Borrower can cut years off mortgage without signing up for program

Q: Making bimonthly mortgage payments — good idea, or bad? — Via e-mail

A: As with many financial plans, what might be good for one person could be bad for another.

First off, though, you haven’t been offered a bimonthly plan.

That would mean every two months.

More likely, what you’re asking about is a chance to make biweekly payments, with half a regular payment automatically taken out of your savings or checking account every two weeks.

Nothing wrong with that if you realize you’d be investing extra money to pay down your mortgage more quickly.

If you’re thinking it’s half a payment twice a month — think again.

When you pay every two weeks, you’d sometimes make three half-payments in one month, on, for example, the 1st, the 15th and the 29th.

You’d end up with 26 half-payments a year, the equivalent of 13 regular monthly payments.

It’s that extra money that works the magic.

You can achieve the same result, cutting seven or eight years off a 30-year fixed-rate loan, by sending in one full extra payment a year, on a separate check clearly marked “to be applied entirely to principal.”

You could even throw in the money you didn’t spend joining the biweekly plan and paying the monthly service charges.

But if you’d like a bit of enforced savings, or if a biweekly schedule fits well with your budget, go ahead and sign up for the plan.

Just be sure you understand it.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

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