Q: Some mortgage companies allow you to pay your mortgage twice a month, paying the two halves of the mortgage at different times instead of in a lump sum at the beginning of each month. They usually charge a one-time fee to arrange for this method of payment. Is there any way to avoid the fee if I decide to use this program?

A: Prepaying your home loan is a great way to save money painlessly. Making one extra mortgage payment a year can cut your home loan from 30 to 23 years.

Bi-weekly mortgage programs can help you do this, but you should avoid such programs that carry a fee. You can achieve similar results by simply adding 1/12 of your regular mortgage payment to each month’s payment.

When you pay bi-weekly, you’re effectively making a payment every other week, or 26 half-payments. That translates into 13 monthly payments in a single year. The extra payment is applied to the outstanding balance, so you’re paying down your mortgage more quickly.

To figure out how quickly you can pay down your existing home loan, try the amortization calculator at www.eloan.com.

A word of warning: Prepaying works best when you pay the same amount each month. So decide whether you’re going to pay an extra $25, $50, $100, or even $1,000 each month and stick with it for at least a year. If you’re going to change the prepayment amount, make sure you keep a written record and check each statement to make sure the correct amount has been subtracted.

You can either write out a separate check with the prepayment amount and direct the lender to apply it to the outstanding balance, or if you have a payment coupon, simply check the box that indicates any overage should be applied in that manner.

Oct. 17, 2003