The Gigantic Bank that holds the mortgage on Laquedem Manor writes Mrs. Laquedem and me with an offer that it says will save us $26,000. If we authorize the GB to extract half our monthly mortgage payment from our bank account every two weeks in place of our writing a check for the entire payment once a month, then over the life of our loan we will pay $26,000 less interest. This (what it proudly calls the Equity Accelerator program) will pay our loan faster. The GB will also give us a discount of $10 on this month’s payment if we sign up.
Of course it will, because in one year we will make the equivalent of one extra mortgage payment (26 half-monthly payments equate to 13 monthly payments instead of 12). No surprise there, and the form modestly discloses this.
What’s not disclosed in the letter itself, but only in the fine print on the back, is what the GB will charge us for letting us pay faster: $49 to sign up, and $9 per month ($108 per year) as a “Participation Fee.”
We should pay $108 per year for the privilege of paying faster? No, thank you, GB; but I think I’ll buy some of your stock.
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Or you can just implement the program yourself, and send an extra 1/12th of a payment every month, accomplishing the same thing, giving yourself the flexibilty to not send it if money is tight, and avoiding those pesky fees.
Hmm . . . When I got my mortgage in CT, I received 4 or 5 of these offers from various companies, but never from my bank (or the mtg. company that my bank eventually sold my mtg. to). Wonder if there are laws that prohibit that in my state?
IgAR