Mortgage Reduction Programs
What if you opened your mailbox and found an offer that would allow you to pay off your mortgage years ahead of schedule? This is exactly the promise made by businesses that offer mortgage reduction programs.
How the Programs Work
Mortgage reduction programs typically debit your bank account every two weeks for half of your monthly mortgage payment. By paying every two weeks instead of every month, you end up making an extra month's payment each year.
Tips To Consider Before You Sign Up
- Mortgage reduction programs often charge high fees. Some companies charge as much as $550 to set up the program and $2.50 each time your account is debited.
- Since the company collects money from you every two weeks but only applies it to your mortgage on the due date, the company earns interest on your money.
- Once you sign up, you must make all of the payments if you want to continue in the program. If you don't, you’ll face late fees and may lose your right to participate in the program.
- If you decide to set up a formal mortgage reduction plan, choose carefully. Call your mortgage company first. You may be able to set up a plan directly with them or they may have a mortgage reduction program to recommend.
- If you go with a company that isn’t your mortgage company, make sure your money will go directly to your mortgage company so there is no chance of your mortgage not getting paid.
- Make sure the contract gives you the right to cancel at any time, and that any money that has been debited from your bank account, but not applied to your mortgage payment will be refunded to you. Remember that you won’t get back any fees you paid to set up the mortgage savings program.
- Consider a do-it-yourself mortgage reduction plan. Most lenders allow you to designate an extra amount of money to be credited toward paying the principal on your loan. Simply send a bit more money with your regular mortgage payment each month.
- By making an extra payment each year through the do-it-yourself method, you can achieve the same results as a mortgage reduction program, but with greater flexibility. If you find yourself short on funds one month, you can make your regular mortgage payment without adding any extra.
We Can Help
If you have a complaint about a mortgage reduction program, contact us
toll free within North Carolina at 1-877-5-NO-SCAM.