Trapped by the fine print????

[alchie]

I recently refinanced my mortgage in Illinois, and had every intention of making biweekly payments to save gobs of money. In reading the mortgage, I saw that there was no pre-payment penalty, and I felt I was good to go!

Well, after making my first 2 biweekly payments, I received a letter from the bank saying they are not set up to process partial payments, and of course suggested the "Equity Accelerator Program" for a $295 fee and $15 a month. In reading the legal mumbo jumbo fine print of the mortgage, it seems they have reserved the right to just hold onto the money and refuse to apply it to anything, and send it back every month.

Am I totally trapped here into having to use their service (rip-off)????

 

[HomeGuru]

I recently refinanced my mortgage in Illinois, and had every intention of making biweekly payments to save gobs of money. In reading the mortgage, I saw that there was no pre-payment penalty, and I felt I was good to go!

Well, after making my first 2 biweekly payments, I received a letter from the bank saying they are not set up to process partial payments, and of course suggested the "Equity Accelerator Program" for a $295 fee and $15 a month. In reading the legal mumbo jumbo fine print of the mortgage, it seems they have reserved the right to just hold onto the money and refuse to apply it to anything, and send it back every month.

Am I totally trapped here into having to use their service (rip-off)????

**A: contact your State Consumer Protection Office.

 

[A Smiley]

Absolutely, you should contact your Consumer Protection Agency.

In the event, however, the issue is not resolved to your satisfaction, here is another money-saver you might try that should not fall under the umbrella of "partial payment": Place an amount equal to 1/12 of your mortage payment each month in your savings account. At the end of the year, forward this amount as a thirteenth payment and ask specifically that it be credited towards the loan principle. Some mortgage companies that do not look kindly on the paperwork associated with a biweekly payment will accept accelerated payment of principle. This is not quite as good as the bi-weekly approach, but it does save interest in the long run.