A friend recently told me about a mortgage his clients recently signed … a 40 year plan at a 9 1/2 percent APR.  I nearly fell over.  They must have had some risk in their credit score and employment history to get that seemingly bad deal in this generous mortgage rate era.

Another mortgage is also now being marketed – a plan in which home owners make a payment every two weeks rather than monthly.  It can be good in that the loan will be paid off earlier, but there are some concerns.  According to Miranda Marquit of The Military Wallet,

A biweekly payment means that the lender loses out on some of the money it would have received if you fulfilled the original mortgage terms. To make up for this, some lenders charge a monthly plan fee, or charge an upfront enrollment fee. Another thing to be wary of is a prepayment penalty. Double check your mortgage; it a prepayment penalty is involved, enrolling in a biweekly plan could be counterproductive.

Before jumping in, weigh all the pros and cons.  And if you’re considering a 40-year mortgage at 9 1/2 percent, look elsewhere!