Question: Are all bi-weekly programs the same?

Answer: No. Bi-weekly programs can be divided into two groups: those programs operated by lenders and those programs operated by folks who are not lenders.

Third-party non-lenders collect payments bi-weekly and then make payments to the original lenders. This is something that any borrower not facing pre-payment penalties can do without paying several hundred dollars up front to a third-party, or a few dollars with each payment.

As well, those interested in bi-weekly mortgages should ask if the third party non-lender is licensed, insured (how much), bonded (how much), etc. Ask if there is a requirement for the third-party lender to hold funds in an escrow account, an important protection in the event of a bankruptcy, judgment, or fraud.

Also, while borrowers may be making bi-weekly payments, some bi-weekly non-lenders do not. Instead, with some programs 11 regular payments are made as well as a larger 12th payment. Thus the borrower does not get the full benefit of a true bi-weekly schedule.

There are any number of bi-weekly mortgage programs out there and lenders are not quiet about them.

But, who needs a bi-weekly program? That just means 14 extra checks to write each year. A far easier approach, if you have a loan without prepayment penalties (as most borrowers do), is to simply increase the monthly payment -- you can easily achieve the same results. Since lenders do not want to process an additional 14 payments a year, steady pre-payments will be greatly appreciated under most loan programs.

Speak with your lender about available options if you have an interest in prepaying your mortgage.