[QUOTE=Balthisar]
Unless things have changed, they get paid bi-monthly rather than semi-weekly in the military. Most big corporations, I imagine, pay you bi-monthly rather than semi-weekly too, although that often goes hand in hand with your exemption status. I think my companies hourly employees are paid weekly, but we salaried folks are bi-monthly, meaning that we only get 24 direct-deposits (who really gets paychecks anymore?) per year, rather than 26 if it were a true semi-weekly payment schedule.
I made an extra principal-only payment to my second mortgage last month. That one payment knocked off three months from the end of my loan, because you have to look at it this way: today, I owe (making up round numbers here), $10,000. So from today through the next 15 years, I’m paying compound interest on today’s balance. If I reduce today’s balance to $9,500, then the interest for the next 15 years is based on that amount. Your payments stay the same, so the consequence is your loan is paid off earlier. Another option would be to ask your bank to re-amortize your mortgage so that your payoff date stays the same. This will decrease your payment slightly every time you re-amortize, but that seems like a bad idea and there’s no good reason to do so, even if the bank would cooperate.
Also keep in mind that there’s often no way to tell the bank the purpose of your payments. Look at these two situations: you have a $1000 payment, so you send in $2000. Most banks will automatically credit the extra $1000 as a principal reduction. But… suppose you send in your normal $1000 payment, and then a week later send in what you imagine is a principal reduction check for $1000? In all likeliness, your bank will credit this as your next payment due! It’s not their fault, they don’t know what you intend. This is a bad thing, because it’s just principal+interest(+escrow if applicable) and you see no interest savings down the road. (In my case, it turns out that my bank lets me program principal-only payments electronically, so I did once or twice while figuring out what to do with what would normally have been my car payment.)
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Before I retired, in '79, the Navy paid every two weeks. I don’t recall when they changed from semimonthly, but it was several years before that, maybe in the 60’s. I thought all the services did, but I don’t know that.
Back to the OP. Your step brother is getting himself involved w/ a scam, it’s probably legal, but it’s a scam none the less. There are several permutations of this, some of them may actually be illegal, but they all cost the homeowner money, when they could pay down their mortgage principal themselves, w/o a third part getting involved. Your step brother is probably being promised a commission, based on how many suckers he can convince to go for this deal. I’d advise him to take a pass, but he likely sees big money because someone sold him a BS line. I doubt the big money will materialize.
