How to set up Bi-weekly mortgage payments

Read the twice-monthly question... didn't help. My 'payment' is bi-weekly, but it is really not a payment in that the amount ($800) deducted from my bank account is placed in bank escrow account and then on the first of each month the bank deducts the payment amount ($1200) from the escrow account. Thus, over the year there will be 13 payments vs. just 12.

I set up an account to move the bi-weekly funds into a 'local' escrow account but how do I set up the mortgage account to handle the funds from the escrow account?

TIA for any assistance
jdadwilson

Best Answers

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited March 1 Accepted Answer
    I suggest you use the loan payment reminder or memorized payee to withdraw the funds from the escrow account: open the loan account, press Ctrl + Shift + N, select Enter Loan Payment  

    Note:  Bi-weekly means you'll be making 26 payments to the escrow versus 12 monthly payments to the mortgage each year.

    If you're paying $800 bi-weekly to escrow for a $1200 monthly mortgage, you'll be paying $1600 a month toward the mortgage ($400 extra principle) from the escrow account except when there is a third payment in the month (twice a year) in which case you'll pay $2400 toward the mortgage ($1200 extra principle) from the escrow account.  
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited March 2 Accepted Answer
    Sherlock, thanks for your reply. Yes, I understand the math. The purpose is to pay off a 30 year mortgage in just over 15 years.

    The problem is not with what I can do but what the bank does. The bank withdraws the funds every two weeks and places them into their escrow account. Then on the first of each month, the bank withdraws the funds from the escrow to pay the loan amount and apply the excess to the principle.

    Thus the question, how can I set up Quicken to track the transactions?

    jdadwilson
    As I already suggested, you should use the loan account's payment reminder or memorized payee to withdraw the funds from the local escrow account and you will need to edit the loan payment appropriately for the additional principal.

Answers

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited March 1 Accepted Answer
    I suggest you use the loan payment reminder or memorized payee to withdraw the funds from the escrow account: open the loan account, press Ctrl + Shift + N, select Enter Loan Payment  

    Note:  Bi-weekly means you'll be making 26 payments to the escrow versus 12 monthly payments to the mortgage each year.

    If you're paying $800 bi-weekly to escrow for a $1200 monthly mortgage, you'll be paying $1600 a month toward the mortgage ($400 extra principle) from the escrow account except when there is a third payment in the month (twice a year) in which case you'll pay $2400 toward the mortgage ($1200 extra principle) from the escrow account.  
  • jdadwilson
    jdadwilson Member
    Sherlock, thanks for your reply. Yes, I understand the math. The purpose is to pay off a 30 year mortgage in just over 15 years.

    The problem is not with what I can do but what the bank does. The bank withdraws the funds every two weeks and places them into their escrow account. Then on the first of each month, the bank withdraws the funds from the escrow to pay the loan amount and apply the excess to the principle.

    Thus the question, how can I set up Quicken to track the transactions?

    jdadwilson
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited March 2 Accepted Answer
    Sherlock, thanks for your reply. Yes, I understand the math. The purpose is to pay off a 30 year mortgage in just over 15 years.

    The problem is not with what I can do but what the bank does. The bank withdraws the funds every two weeks and places them into their escrow account. Then on the first of each month, the bank withdraws the funds from the escrow to pay the loan amount and apply the excess to the principle.

    Thus the question, how can I set up Quicken to track the transactions?

    jdadwilson
    As I already suggested, you should use the loan account's payment reminder or memorized payee to withdraw the funds from the local escrow account and you will need to edit the loan payment appropriately for the additional principal.
  • LieseAnn1
    LieseAnn1 Member
    I've recently had the same issue.
    The escrow account can be used to "hold the money", albeit it isn't truly held there. My mortgage draws $1250 bi-weekly and holds the money to apply on the 1st of every month to meet the $2404.26 payment. So here is how I apply. ...
    First, if a payment is pulled 1/12/2021, it shows in my checking account register and is applied as a withdrawal that deposits into the mortgage escrow account. The second mortgage payment on 1/26 shows in my checking account register as withdrawal, but this time as a split. I set the split up so that a portion goes to the mortgage interest (aligned to the mortgage statement), and the second part of split goes to the mortgage escrow account. (again not clean as it isn't the mortgage due date, but it will get the job done.)
    Secondly, at the mortgage escrow account, add a line item for the date of the mortgage payment and reduce the mortgage escrow account by assigning the withdrawal to the mortgage loan (I use a dual split with one line showing the principal amount from the mortgage statement, and the second the extra principal paid.)
    Because my bank is holding my money, I am cancelling the bi-weekly pull. Instead I will have the mortgage auto pay when due, and I will pay an extra monthly amount on my own that will apply directly to the principal.