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FAQ: Reverse Mortgage in Quicken

Tony Dalia
Tony Dalia Member ✭✭
edited December 2019 in FAQ'S (Windows)
How to set up a reverse mortgage in Quicken. I have the most recent subscription version.

Comments

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited September 2018
    It might be helpful to disclose more detail here.  I understand that different reverse mortgages can work differently, i.e, you might take all cash up front, schedule out a periodic disbursement of cash, even use the reverse mortgage like a credit line where you request draws.  I suppose, too, that some lenders might allow downloads into Quicken and others won't have that facility.

    Generally, the accounting is pretty straightforward.

    A receipt of cash from the reverse mortgage would be accounted for in Quicken as a "transfer".

    That is:

    Debit (Increase)   Cash in Bank Account
    Credit (Increase)  Reverse Mortgage Loan Account

    If the disbursement is all "upfront" then you'd make that entry when the loan closes.  If the loan provides for schedule payments to you or allows you to use the loan as a line of credit then you'd make a similar entry each time you received cash.

    Probably with the first disbursement there would be fees associated with the loan closing so that initial entry, (and, maybe, subsequent entries), there could be associated loan fees to be recognized, requiring a "split" entry:

    Debit (Increase)   Cash in Bank Account
    Debit (Increase)   Reverse Mortgage Loan Fees Category
    Credit (Increase)  Reverse Mortgage Loan Account


    Since you're not making payments against the loan you would expect the loan balance to increase over time since interest is being charged and added to the loan balance.  So periodically you'd expect to make an entry increasing the mortgage loan balance and recognizing the interest expense.

    That is:

    Debit (Increase)    Reverse Mortgage Loan Interest Category
    Credit (increase)   Reverse Mortgage Loan Account
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