How can I set up my mortgage for biweekly payments?

mandjaustin1

I have recently changed my mortgage to pay half every two weeks to reduce the principal every 13 weeks. I do not see an option to change the frequency or the amount.

Tom Young

"I have recently changed my mortgage to pay half every two weeks to reduce the principal every 13 weeks."

I don't understand that sentence.  I assume what happened was that you modified the mortgage from a monthly payment of $X once a month to payments every two weeks of $X/2.  But I'd think each payment would comprise some principle and some interest, so I don't understand the "reduce the principal every 13 weeks" aspect..

NotACPA

Also, does your lender actually apply your payments to the loan immediately?  Which would cause the principal to reduce with every payment?

OR, does your lender sit on your 1st payment in a month until the 2nd payment in a month is received and then apply then both (reducing your principal at that time)?

If the principal is reduced immediately, it benefits you.

If the lender sits until both payments are received, it ONLY benefits the lender, as they get your money for a couple of weeks with no reduction in your principal or in the interest owed for the next month.

mandjaustin1

Thank you for your reply. It is the second option that apparently benefits the bank. My question was more about how to set up my loan in Quicken for biweekly payments which I have since figured out. Thanks again!

Tom Young

"It is the second option that apparently benefits the bank. My question was more about how to set up my loan in Quicken for biweekly payments which I have since figured out."

You may have "set it up", but it's not going to work for you, programmatically, if you're making a payment without getting some sort of credit for principle reduction with each payment.  Quicken can handle an "every two weeks" payment situation, but it won't handle the situation where some principle gets applied with each payment.  It doesn't make sense to me that you'd agree to an $X/2 payment every 2 weeks without any benefit to you.

What am I missing here?