"There may be times when you're caught off-guard with an unexpected expense and your account happens to be low on that particular day that the bank tries to siphon the money out," he or she continues. "You're much better off on a traditional monthly payment cycle. If you want to save money in the long run, include an extra payment to the principal in each month's check.”
What's more, says another, “If your mortgage gets sold, a common occurrence, there will inevitably be a blip in the system that doesn't catch an auto payment generated to the 'old' mortgage company. Getting it back will be a red tape nightmare."
“Manage your account on your own,” she says. "Some banks may charge an 'enrollment fee' for setting up [a bi-weekly payment structure], which is absolutely ridiculous. Citi, for example, charges customers $375 for keeping you on a ‘consistent schedule,’ something any of us can do for free.”
But Torabi does recommend setting up automatic monthly payments in your own checking account (which are free to do), and “once a year, hop onto your online account and add an extra mortgage payment to your principal. An extra mortgage payment per year can shave thousands of dollars in interest payments, as well as years, off your mortgage."
While automatic payments may be risky for those living paycheck to paycheck with no savings cushion," says Torabi, it’s definitely the best way to ensure that your mortgage--likely, your most significant financial obligation--gets paid on time.
"It’s just one less bill to worry about," she says.
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