We've made some folks mad by sharing the cold, hard truth. I knew we'd rattle some cages when we decided to talk about bi-weekly mortgage payments and the companies that offer the service for a price. Apparently we rattled someone's cage pretty hard. A company called us on the phone this week to let us know how much we "got wrong." Now, let me start by saying that everything we've said is factual and is not intended to bash "an entire industry" as this person said to me. In fact, we believe in paying for services you find valuable. If you need help setting up and sticking to a budget, certainly feel free to find a company you can pay to do that for you. However, AmeriFirst Home Mortgage does not suggest that you pay only for a bi-weekly mortgage payment service. Let's look at the differences.
Bi-weekly Mortgage Payment Service vs Budgeting Service
A company that would help you budget all of your monthly bills so that you don't go into debt may do so for a reasonable rate. It may even be a valuable service if that's what you need. Just make sure you're getting what you pay for. If this company offers to help you budget all of your bills, then you're getting more bang for your buck.
The problem comes when a company offers to pay only one bill, suggesting that it's paying the bill more often than it actually is paying it. For example, much of the advertising done by bi-weekly mortgage payment services states that the company will save you money by paying your mortgage twice a month. In reality, the company pays it once a month, you just end up with one extra payment over the course of the year because bi-weekly over one year adds up to 13 monthly payments. Watch the video below to see what we're talking about.
You can see the video here - 60 Second Mortgage Tip: Bi-Weekly Mortgage Payments
Another cautionary piece of advice: these advertisements and postcards you may see often mention your property address and the mortgage lender. This does not mean the ad came from the lender. The information is public, and quite often bi-weekly mortgage payment service companies found the information and put it into an advertisement. This often leads homeowners to believe we as the lender promote this third-party service. That seems dishonest, and we do not endorse any such services.
Here's the bottom line: if you find value in paying a company to pay your bills, then by all means go right ahead. If you feel that you need someone to set up your budget and make you stick to it, then finding a budgeting service is right up your alley..and that's completely fine to do. Just understand that A) you can find budget advice for free from people like Dave Ramsey and B) bi-weekly mortgage payment services don't work like you think they work. Read more about how exactly this all works here: Bi-Weekly Mortgage Payment Services: Scam or Service?
Want to know more about the home buying process? Download "The Essential Guide to Buying Your First Home" at the button below. The free guide covers other first home buyer questions about credit, down payments and more.
(tantrum: Flickr user Ryan Boren)