Sidestepping the Fee

Last week I mentioned that I’d set up an autopayment through my checking account to throw additional principle at my mortgage.

My lender, Countrywide, offers a few different auto-payment plans of their own, but they CHARGE for it?!

Bi-monthly payments get you a $4 service charge per payment. Total damage: $96/year.

Bi-weekly payments also have a $4 service charge attached. A worse deal, coming to $104/year.

Weekly payments have a $2 service charge. Even still, that works out to $104/year.

Makes you wonder why they don’t just come out and say there’s a $100 charge for the service… Oh yeah, because then they wouldn’t have any takers… The funny part is that they describe it as a “nomimal per draft fee”.

Maybe I’m just cheap, but $100 is hardly insignificant. Especially when just slightly more than that amount goes to the principle with every regular mortgage payment I send in. Countrywide claims that enrolling in one of these plans is like making 13 payments per year. But… subtracting interest and escrow, they’re taking one of those payments right back out in fees… It’s a terrible deal.

So, last week, I came up with the brilliant scheme to initiate payment from the opposite side — through my checking account at Bank of America by utilizing their BillPay system.

To test things I set up an automatic $25 transfer to go to Countrywide each Monday. This morning, on the Countrywide website, my transaction history indicated a $25 reduction in my principle. Woo-hoo!

Now, I don’t think this would work for paying my mortgage each month, since the payment went towards the principle only, but that was never really the plan anyway. I’ve no problem mailing a check in each month, but this will allow me to paydown the loan even faster without a fee or a noticable void in my wallet.