Three and one-half years ago I purchased my first home. I bought a modest condo in Lake County and took out a mortgage that was 48% of what I’d pre-qualified for. I put down 20% of the purchase price, which was 70% of the asking price. Ya, I’m a kick-ass negotiator, when backed by the amazing Shelley Goddard of Coldwell Banker.

A lot of people thought I was crazy. They asked, “Why not take advantage of the full amount of money the bank was willing to loan me and purchase something more luxurious?” The reasons were simple. When I ran the numbers, I could sleep at night having the monthly payment I’d have with the smaller mortgage. A larger mortgage would mean I cut expenses in non-essential areas like fun. That thought was decidedly not fun. Finally, a smaller mortgage meant I had more money to invest in my retirement savings and I’d rather live in a more modest home now than be poverty-stricken in my retirement.

Since taking out my mortgage, my bank has sent me two offers “save” money on my mortgage. If you have a mortgage, you’ve probably received similar offers. These offers are perfectly legal and, for some people, they can mean real savings. Because of that, I’m not going to call out my mortgage company by name.

The thing is you have to really examine your personal situation before you hop on any of these offers.

Did you catch that? YOU have to really examine your personal situation before you hop on any of these offers. Why? The bank is looking to make money, not be your BFF. Let me explain . . .

First offer received within a month of closing on my home: “Make one-half of your monthly mortgage payment every two weeks. This will result in 13 monthly payments per year and allow you to pay off your 30-year mortgage in just 17 years!” Catch: To sign up for this, I’d need to pay the bank a one-time fee of $2,500.

I know that making an additional monthly payment each year and specifically directing the bank to apply it to my principal would result in significant savings and cut years off my mortgage if I did this every year. But I couldn’t figure out why I should pay the bank for the privilege, when I could do it on my own.

I called my Uncle Ray and explained the situation. Uncle Ray was a brilliant banker, everyone in the family went to him for financial advice, my grandparents trusted him to handle their finances in their final years and be the executor of their estate, and I knew that he’d guide me in the right direction.

He confirmed that I could do this on my own without paying the one-time fee of $2,500 because my mortgage had a clause saying there was no penalty for early pay-off of the loan. The key, he pointed out, is that many people aren’t disciplined enough to make these extra payments, so these plans may be good for them.

He also told me that if I signed up for this program (i.e., signed a contract), I’d be locked in and if my financial situation changed (e.g., I became unemployed, I had major health issues, etc.) it may be quite difficult to get out of the bank’s plan. If I made was only voluntarily making extra payments, I could stop making them at any time.

BUT he reminded me that because I had such a low interest rate (4%), I’d really be better off in the long-term maximizing my retirement savings and unless I’d completely maxed out what I was allowed to save, paying off my mortgage early wasn’t a great idea.

I took his advice and sunk my money into retirement savings.

Second offer received yesterday: “Save $35.48 per month on your mortgage by refinancing.” Catches: This would restart the 30-year mortgage clock and there would be an average of $1,347 in fees.

I can no longer call Uncle Ray for his advice on this, but the truth is that I don’t need it.

This is simply a bad deal for me for two reasons. First, I’m three-and-one-half years into my mortgage meaning I’ve got 26.5 years left. In the end, if I refinance, I’d make 33 years and six months of mortgage payments on a 30-year loan. Adding years to the life of my loan means more money out of my pocket. Second, I would not see any actual savings for 38 months (three years and two months). Why? Because I’d have to spend $1,347 to refinance, which is equal to 38 payments of $35.48.

These offers can result in savings for a lot of people, but in my case, neither one makes sense. The lesson here is know your mortgage, run the numbers for yourself before taking the bank up on any of their “money saving offers,” always read the fine print, and if you know someone knowledgeable in these matters who you trust and who has nothing to gain, ask them for advice.

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