Soon after you’ve purchased your new home you may start getting offers from your lender about taking advantage of a mortgage reduction program. Through the program you can literally cut years off of the term of your mortgage. In fact, you might have your home paid off from five to seven years early.
Instead of making one monthly mortgage payment, you simply divide your payment in half and make a payment every two weeks. Over a years time, you’ve actually made an extra mortgage payment. It’s sounds like a really good deal, but there are several bad aspects to a reduction program.
In the first place, this is something that you can do all on your own. All you need to do is to add some to each of your monthly mortgage payment. Your mortgage invoice even gives you the option of paying additional principal. You don’t need to have anything setup to pay your mortgage off sooner in this way.
Another thing that the lender doesn’t want you to know is that they will charge you a fee to set up the reduction program. The setup fee generally runs from between $250 and $350 and on top of that, they’ll charge you a monthly processing fee. So, if this is something you’d like to do, just do it yourself and save some money.
