I have a 30 year mortgage on a piece of property with a $350,000
principal balance @ 5.125% interest. For the purposes of discussion
use August 1, 2004 as the funding date with the first payment due on
September 1, 2004.  My payment is $1,780.48 per month.  I am
attempting to analyze what benefit there might be to signing up for my
mortgage lender's semi-weekly payment program.

I understand how the program works.  It is essentially taking my
monthly payment and multiplying it by 13 and dividing it by 26
semi-weekly payments.  The problem is the fees the lender charges to
enable this program will easily run $5,000 over the life of the loan. 
The bank will not allow me to manually write checks semi-weekly to
achieve the same result.  The best I could do would be to make my
regular monthly payment and then send a separate $68.48 semi-weekly
principal reduction payment.

I would like to know what would be the total interest on the loan and
the total number of semi-weekly payments if I were to make semi-weekly
payments of $821.76 and the interest is calculated semi-weekly, not
monthly.  It is my intent to compare the result with my 30 year loan
to determine if the interest savings justifies spending $5,000 on the
lender's program.

I would also like to know how much my overall interest costs will be
over the life of the loan and what month & year the loan will pay-off
if I just make the $68.48 semi-weekly principal reduction payments.

Hi - not a google researcher, but I've received (and declined) similar
offers recently from my lender and others (3rd parties). As I
understand it, paying bi-weekly (every 2 weeks) doesn't necessarily
mean that the payments are being applied (and interest is being
calculated) that way. The note could still be running on a monthly
clock even if the lender has a "partial payment" from you. You can
achieve the same intended results (save tons of interest dollars and
shave 7 or 8 years off the mortgage) with no fees from anyone by
adding one-twelth of $1,780.48 ($148.37) to each monthly payment for
principal reduction. In effect, you're still making 13 mortage
payments per year, but with only 12 checks. Anyhow, just my
unsolicited two cents - leave it to the pros to do all the fancy
figuring. :-)

Thanks hyphenga-ga.  I suspect you are correct.  If my lender is
calculating interest on a monthly basis, then there is absolutely no
reason for me to sign-up for their program.  I could just do as you
say and send them a monthly principal reduction check.  I was
considering the possibility that they might calculate interest
semi-weekly if I were to convert to their program.  In that case, the
answer to my question would be what is the difference between the
semi-weekly interest calcs and the monthly calcs over the life of the
loan.

Like you, I'm thinking these programs are a scam and that the amount I
would pay to have them administer it is greater than the savings.

Thanks for your comment.  

Spencer

I've used biweekly payment setups in a previous mortgage and they are
a wonderful mechanism for faster payoff.  If your lender wants to
charge you a fee for this, then I'd suggest you look to change
lenders.

While you're at it, I'd recommend an alternative to the 30 year fixed
rate mortgage.  Consider a 7/23, or a 7/1 ARM, or even a 5/1 ARM.  If
you run the numbers and pay off the same amount as you are considering
doing, chances are the combination of increased payments and lowered
interest rate could have you wind up paying much, much less in the
long run.  Don't be put of by the apparent risk of the ARMs, as long
as you pay it down before it adjusts with discipline, the balance at
that point will make it a better deal.  Add to that the adjustment
caps that are normally in place (like 2% per adjustment, 5% lifetime,
etc., even a maximum adjustment will be less painful than you might
expect.