bi-monthly payment

I'm searching for the best way to set up a bi-monthly payment mortgage so that my saved interest and princiapl are reflected correctly.

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treasur2 wrote:

What version/year of Quicken?
What is "saved interest"?
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In addition to JP's questions: Was your mortgage established with 24 payments per year, so that EACH payment reduces principal and interest? OR, are you just making 1/2 of the planned monthly payment twice a month?
If the former, you'd pay slightly less interest (and slightly more principal) with each and every bi-monthly payment. If the latter, you'd need to ask your lender how they are recording the payments.
The mortgage note that you signed when you closed on the loan should state how many payments are expected over the life of the loan. For a 30-year mortgage, this would be 360 payments.
Also, your lender should be able to provide your with an "anticipated amortization schedule", showing how your outstanding loan amount would decrease with each required payment when you pay according to the loan documents.
Without knowing more about how your mortgage was set up, we can't possibly assist you.
db
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Quicken 2007 H&B. It was set up as a 30 fixed with a single payment. Now I'm having the lender withdrawl the payment in two parts of equal amount. I have not recieved a new amortization schedule.
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You need to read the fine print closely on your lender agreement. In many cases they will take the money bi-weekly, but only apply it at the end of the month. This greatly reduces or eliminates the interest savings you may be expecting. A lot of times the lender will charge you for the privilege of doing this!
It's often better to just make extra principal payments yourself, either along with your monthly payment or as a separate payment. The only trick there is to make sure those payments are applied to the principle and not held in an escrow account. This also gives you the flexibility of skipping an extra payment when you need to.
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I'm very aware of the implications of how I pay it. My question regards getting into Quicken. Does quicken have a bi-monthly payment option, or does anyone have a fix or trick to make it work?
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You have YET to explain how your lender is handling the multiple payments.
Those on this board could provide multiple methods of how your payments MIGHT be handled.
THEY'RE ALL IRRELEVANT!!!
All that matters is how your lender is posting the payments. Put that explanation up here, and we can tell you how to record the transaction in Quicken.
db
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I have Quicken 2009D. I using the Loan Wizard I was able to set-up a Bi-Monthly Payment-Frequency with a Compounding Period of Monthly for a 30 Year Loan at 4%. It seems the functionality is there. I can also go into an existing loan and change the Frequency. However unless I know how the lender is accounting for this - I am really clueless to provide you a better answer because I would have to verify what I entered against their amortization schedule - which they should be able to provide and explain to you. Unless we understand how your lender accounts for it (the real world) all we can say the functionality appears to be here.
Oilcan
-----Original Message----- From: danbrown [mailto: snipped-for-privacy@yahoo.com] Posted At: Saturday, January 10, 2009 4:17 PM Posted To: alt.comp.software.financial.quicken Conversation: bi-monthly payment Subject: Re: bi-monthly payment

You have YET to explain how your lender is handling the multiple payments.
Those on this board could provide multiple methods of how your payments MIGHT be handled.
THEY'RE ALL IRRELEVANT!!!
All that matters is how your lender is posting the payments. Put that explanation up here, and we can tell you how to record the transaction in Quicken.
db
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Hi, treasur2.
I agree with Dan Brown: You haven't yet told us what the lender does with your first payment while waiting for the second one.
If your first payment is applied to your loan immediately, it should first pay the half-month interest accrued since your last prior payment; the excess should then be applied to the principal balance - which would lower the interest for the next half-month. When the second payment is received, it should be applied in the same way: first to the half-month interest and then to reduce the principal before the next interest calculation.
But that is only theoretically correct. We would have to read the loan document that you signed to see whether you agreed to some other arrangement. You may have agreed that the lender can simply hold your money for a half-month in something like an escrow or impound account - without paying YOU any interest for that period. You might even have agreed to pay the LENDER for holding your money for you. Or you might have agreed to some other terms, which we can't even guess. IF the payment is applied only once a month, then your first withdrawal should be recorded in Quicken as simply a deposit into a holding or Suspense account; when the second withdrawal is made and both halves are applied to the loan, then you record a single loan payment, with half coming from your current bank account and the other half from from that Suspense account.
Or you might have no agreement at all as to how the extra payments will be handled. In that case, about all you can do is try to reach an understanding NOW as to how future payments will be handled.
Remember my Quicken 2-step process:
Step 1: Understand what is happening in The Real World.
Step 2: Figure out how to record THAT in Quicken.
Trying to do Step 2 before Step 1 is nothing but trouble. In your case, you haven't yet told US enough so that we can handle Step 1 - so we can't tell you how to do Step 2. Your original post was extremely uninformative. After more than a dozen posts in this thread, we STILL don't know what is actually happening. :>(
The Step 1 question is: What happens to YOUR money from the time you pay it to the lender until it gets applied to your loan?
During my 30 years of public accounting practice, I dealt with thousands of loan amortization schedules, including hundreds that I created. Many variations happen in real life. There's no way to properly record the payments - in Quicken on with pen and ink - until we know the actual terms of the loan - both the theoretical terms and the actual practice by the borrower and the lender.
RC
--
R. C. White, CPA
San Marcos, TX
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