GMAC Mortgage The pay every 2 weeks plan a RIPOFF AND they LIE about Mortgage terms! BE AWARE! READ ALL THE FINE PRINT! Nationwide
I have a mortgage with GMAC overall they have been pretty good except for 2 things: before the closing I asked if I could pay every 2 weeks, thereby saving interest. I was told several times that was ok.
Well, I made my first payment in 2 installments. Half at the beginning of the month and the other half 2 weeks after. Imagine my surprise when I was told I was late on my payment even though I had done it on-line through their site and had made it a month early!!
Well, I called and was told that I wasn't allowed to pay every two weeks that My mortgage contract states, "I will pay my monthly mortgage payment in full by the end of the month". Well, I argued with her because I did make my full payment by the end of the month, just in 2 installments. But she said that it has to be the enitre payment at once.
Well 2 weeks later, guess what?? I got an offer from GMAC that if I paid a $360 "set-up fee" that I could enroll in a program that allowed me to pay every two weeks. The offer went on to tell me how much intrest I could save. Well when I read the fine print, it states that even though they take your payment every two weeks, they actually CREDIT it at the END of The Month!! Just like you have to pay now!! So basically you pay $360 dollars for nothing! BE AWARE! READ ALL THE FINE PRINT!
Cybelle
dover, New Hampshire
U.S.A.
1 Updates & Rebuttals
Mike
Radford,Virginia,
U.S.A.
The subtle difference between "every 2 weeks" and "twice a month"
#2Consumer Suggestion
Thu, September 25, 2003
Paying every two weeks pays off a conventional loan early because there are 52 weeks in a year. If you pay half a payment every two weeks you end up making the equivalent of 13 payments per year instead of 12. Paying extra on a mortgage or other simple interest loan will pay it off sooner, which saves interest. Even though you pay more per year, the total of payments is less.
This works if the loan is structured for monthly payments. Some loans are structured from the beginning so payments are due every two weeks. This makes the payments seem smaller, and also gets a less sophisticated customer remembering he heard something along the lines of "paying every 2 weeks will save money". It only does if the loan is set up for 12 monthly payments per year. If a loan salesman is trying to sell you a loan with payments based on weeks not months, and he says the monthly payment is the same as twice the every 2 weeks payment (or 4x a weekly payment), he's MISLEADING you. He knows EXACTLY what he's doing, and hopes you don't. Run away! If it is for example $200 every 2 weeks, that's the same total of payments as $433 per month, not $400. To add injury to insult, if your job pays "twice a month" instead of "every 2 weeks", there will be 2 months a year where you'll have to make 3 loan payments out of 2 paychecks.
As you correctly deduced, the $360 plan is a total rip-off. You can do the same thing yourself by establishing a bank account and every 2 weeks put half a payment into it; every month take a full payment out and send it to the mortgage company. After a few months of this there will be extra money in the account, which you also send to the mortgage company by making the monthly check larger. For $360 they'll do that for you! Wow. I got the same offer from my somewhat legitimate mortgage company, only I think it cost more than that up front and also had a yearly fee.