Extra payment builds equity with bi-weekly mortgage

Q. Making bimonthly mortgage payments - good idea, or bad?

A. As with many financial plans, what might be good for one person could be bad for another.

First off, though, you haven't been offered a "bimonthly" plan. That would mean "every two months." More likely, what you're asking about is a chance to make biweekly payments, with half a regular payment automatically taken out of your savings or checking account every two weeks.

Nothing wrong with that if you realize you'd be investing extra money to pay down your mortgage more quickly. If you're thinking it's "half a payment twice a month" - think again. When you pay every two weeks, you'd sometimes make three half-payments in one month, on, for example, the 1st, the 15th and the 29th. You'd end up with 26 half-payments a year, the equivalent of 13 regular monthly payments. It's that extra money that works the magic.

You can achieve the same result (cutting seven or eight years off a 30-year fixed-rate loan) by sending in one full extra payment a year, on a separate check clearly marked "to be applied entirely to principal." You could even throw in the money you didn't spend joining the biweekly plan and paying the monthly service charges.

But if you'd like a bit of enforced savings, or if a biweekly schedule fits well with your budget, go ahead and sign up for the plan. Just be sure you understand it.

Q. I have my license with a broker but have never used it. Can I help my mom sell her house for-sale-by-owner without taking a commission or representing myself as a real estate agent? She's moving to an independent living facility and I would like to see her try and sell it by owner before having to get agent(s) and commissions involved.

A. Whether you're active in real estate or not, your broker has a right to know what you're doing, and the public has a right to know you're licensed.

Discuss this with your supervising broker, who bears legal liability for all your real estate activities. And while you're advising your mother, be sure to let potential buyers know that although the house is being sold directly by the owner, you do have a license.

Q. We are wondering, since our house value has decreased since we built four years ago, should we get the house appraised so our taxable amount goes down and we can pay less in taxes? We don't want to keep paying taxes based on its previous value. Would it make sense to get a lower appraisal so we are paying less in taxes?

A. Your property taxes are based on the local assessor's estimate, not on an outside appraisal. The appraisal you got four years ago was for the benefit of your mortgage lender, not for tax purposes.

Your town still has to raise a certain amount of money. If everything in your town has decreased in value at about the same rate, you're still paying the same share you were four years ago.

If you can show that similar properties near you are assessed much less than yours, you may be successful in protesting your figure. No harm in discussing this with a local broker or appraiser. But simply presenting a new low appraisal won't usually accomplish anything.

Q. I have been working with a Realtor for the past several months with no luck. My fiancee and I have begun looking at for-sale-by-owner houses and think we may have found "the one." What steps do I take now considering I have grown to really appreciate my Realtor and now even consider him a good friend?

A. If you've already signed a buyer's-broker agreement that will specify what you owe your agent in the event you buy an unlisted property or one where the seller won't pay your agent.

It sounds as if that isn't the case, though. But you can still profit from the agent's services even if you've found the house on your own. You could now hire him specifically as your buyers' broker, someone legally obligated to put your interests first, help you negotiate the best deal and see the transaction through to closing. You might agree on a flat fee, a low percent in commission, or an hourly rate.

If you haven't already seen the interior of the property you're interested in, your agent can always approach the sellers, asking for a relatively modest commission if they end up selling to the buyers he wants to bring in. Some sellers will agree, some won't. No harm in asking.

• Edith Lank will personally respond to any questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.