HE Loan setup in Quicken Premier 2016 does not agree with bank

I tried to setup a new HE Loan (not HELOC) in QP2016 and the monthly payment does not agree with the bank. I've called the bank about it and they say their calculation agrees with Fannie Mae.

I've Googled financial calculators and the results agree with my numbers, not the bank.

The basic numbers are a HE loan for $65k, 60 months, at 4.15%. The bank payments are $1203.58. All my numbers show the payment to be $1201.48. I cannot find any field in the loan setup for QP2016 that will allow me to come up with that number, ergo, all my numbers are going to be slightly off from the bank numbers.

Any thoughts?

Comments

  • NotACPANotACPA SuperUser ✭✭✭✭✭
    edited October 2018
    1. Ask the bank if any Closing Costs were added to the $65,000 ... making the actual loan amount larger.
    2. Ask the bank to explicitly indicate WHERE, in Fannie Mae, such calculations can be found.
    Because using BOTH Q's Loan calculator AND ExCel's PMT() function, I also came up with $1,201.48.
    Q user since DOS version 5
    Now running Quicken Windows Subscription
    Retired "Certified Information Systems Auditor"
  • speedleverspeedlever Member
    edited July 2018
    No closing costs with this loan. I'm stumped as to how they arrived at their number. They cannot explain beyond the Fannie Mae comment.



    I sent them screen shots of my data and await their reply.
  • speedleverspeedlever Member
    edited October 2018
    Here's the reply I got from the bank after sending them the screenshots.

    "Home Equity loans are set
    up as 45 days out for the 1st payment from the contract date,
    instead of the standard 30 days, like a mortgage. Also the way our system is
    set up for equity loans, it is set up on a daily interest calculator. Our
    amortization schedule is set for 366 basis unlike first mortgage lending."

    I have no idea how to account for this in Quicken. Any ideas?

    Recalculating the loan with daily instead of monthly compounding changed  the Quicken calc from 1201.48 to 1201.68. 

  • NotACPANotACPA SuperUser ✭✭✭✭✭
    edited July 2018

    Here's the reply I got from the bank after sending them the screenshots.

    "Home Equity loans are set
    up as 45 days out for the 1st payment from the contract date,
    instead of the standard 30 days, like a mortgage. Also the way our system is
    set up for equity loans, it is set up on a daily interest calculator. Our
    amortization schedule is set for 366 basis unlike first mortgage lending."

    I have no idea how to account for this in Quicken. Any ideas?

    Recalculating the loan with daily instead of monthly compounding changed  the Quicken calc from 1201.48 to 1201.68. 

    Well, the basic problem is that Q can only calculate the interest for "Monthly Interest Loans" (like traditional mortgages) where the interest due isn't dependent upon when you made last month's payment.
    "Daily compounding" isn't the same thing as "Daily Interest", where the interest owed is calculated each day, depending upon the balance at the end of that day.  SO, if you make your payment on the 1st of August, the interest due in September will differ from if you paid on 15 August.

    The only thing that you can do is enter a "guesstimated" payment/split ... and then correct it when you get the monthly statement.
    Q user since DOS version 5
    Now running Quicken Windows Subscription
    Retired "Certified Information Systems Auditor"
  • speedleverspeedlever Member
    edited July 2018
    Thanks for the suggestion. Sounds like my best option.
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited July 2018
    From C. D. Bales:



    "The bank payments are $1203.58. All my numbers show the payment to be $1201.48. I cannot find any field in the loan setup for QP2016 that will allow me to come up with that number ....".



    It's easy to come up with that number ($1201.58): just key it into the "Monthly payment" box in the "Loan Details" dialog when setting up the loan.



    The question is: will the Quicken payment breakdowns of principal and interest equal the lender's breakdowns?



    I created a Q2017 loan with your criteria and a $1201.58 monthly payment amount and compared the resulting Quicken loan payment schedule to a loan payment schedule using the same loan criteria that I found here:


    https://financial-calculators.com/loa...



    Quicken's loan payment schedule matched the loan payment schedule computed at the above web site.



    I suggest you get a loan payment schedule from your lender and compare that to Quicken's computation.



    [One Caveat: I do not know what the rules are for HE loans. If the rules are basically the same as for traditional mortgage loans (where the principal/interest breakdown follows that in the payment schedule - rather than having the principal/interest breakdown based on the number of days between payments being posted by the lender, as is the case for simple interest loans) then I believe you should be good to go, if your lender's payment schedule matches your Quicken payment schedule.]
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • speedleverspeedlever Member
    edited July 2018
    This seems unnecessary complicated to me. Not sure why it can't follow convention. But they're supposed to be sending a schedule. So I hope to get this figured out.
  • Rick GumpertzRick Gumpertz Member
    edited August 2018
    It appears that the difference lies in the 45 days vs. 30 days until the first payment.  If you compute 45 days interest (using 4.15% * 15/360) on the $65,000, that is $112.40.  Now enter the loan as $65,112.40 (and also starting 45-30 = 15 days after the actual start date).  The resulting payment will be $1,203.56 which is pretty close to what they compute.

    I'm not sure where the extra $0.02/payment comes from.  It may have something to do with their "366 day" amortization whatever that is.  (Please also Google "365/360 amortization".)  I suppose somebody might also have mis-copied the last digit of $1,203.56 as an 8.  Or they might have done some rounding somewhere.

    If you want to match their payment schedule, assume $113.67 instead of $112.40 (an extra $1.27) for the initial 15-days interest and so enter into Quicken a loan for $65,113.67 starting 15 days after the actual start date and you should be pretty close.
  • speedleverspeedlever Member
    edited August 2018
    In the end, that's what I did to make the numbers work. Seems like the finagle factor at work to me, but I didn't know what else to do.



    Thanks.
  • Rick GumpertzRick Gumpertz Member
    edited August 2018
    Quicken just supports payments where the first payment is due 30 days after origination.  That seems to handle most loans that customers encounter.  If the bank instead uses 45 days after origination, something has to account for the extra interest for those 15 days.  Call it a finagle factor if you wish...

    At least you now know where the higher payment amount came from and that it is not mysterious or wrong.
  • speedleverspeedlever Member
    edited August 2018
    I don't know what else to call it. My balance is now off by the amount I had to increase the principal in order to make the payment work out. Is there a better way to approach this?
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