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Tracking downpayment as equity in new home

unknown

Using QfW 2016
I recently purchased a new home for $335 with a down payment of $67K and a mortgage of $268K. I entered all of the "money in" amounts to the Title company escrow account into the "home asset" account ("803"), set up the linked Mortgage account and entered the closing costs by categories in a single, split transaction. When finished, what remained was the $8017.04 "cash return at closing" amount as expected. The value of the house is $350K (I'm a tough negotiator) so, to better track my net worth, I added a Cost to Value Adjustment item of $15K to the register so it calculates into my net worth. After hours of struggling, all my math worked out as it should.

What I can't figure out how to do is get my $67K down payment/equity to calculate into my net worth. Leaving the illusory $15K cost-to-value item aside, that $67K is still "mine" and should be calculated into net worth...right? Or am I missing something.

Any ideas?

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Rich_M

What you said makes sense to me, (Assets - Liabilities = Net Worth), your equity of 67k is the difference between 335k - 268k, so what's wrong? Or am I missing something?

unknown

Where did the $67K come from?

I would image it was a transfer from your checking or savings account.
I would also imaging that you probably have put that in as a withdraw to some category.
You should record it as a transfer from that account to the above account.

But also note if the above account is your house account it isn't how it is normally recorded in Quicken. The balance of a house account in Quicken should be its current value, not your equity in the house. You get the equity in your house by subtracting the loan balance from the house balance. This is why Quicken allows you to link the two, so that it can show them together.

You should either put the closing and such costs into the loan account or use a separate account for recording it.

As in you would for instance start the loan balance $67K higher (negative amount) than the loan amount and the transfer in would zero it out, bring the balance down to the loan amount. The same would be true of the closing costs.

When finished with these the loan account balance would be the what you actually got the loan for, or if you were working in another account it should balance to zero.

unknown

Where did the $67K come from?

I would image it was a transfer from your checking or savings account.
I would also imaging that you probably have put that in as a withdraw to some category.
You should record it as a transfer from that account to the above account.

But also note if the above account is your house account it isn't how it is normally recorded in Quicken. The balance of a house account in Quicken should be its current value, not your equity in the house. You get the equity in your house by subtracting the loan balance from the house balance. This is why Quicken allows you to link the two, so that it can show them together.

You should either put the closing and such costs into the loan account or use a separate account for recording it.

As in you would for instance start the loan balance $67K higher (negative amount) than the loan amount and the transfer in would zero it out, bring the balance down to the loan amount. The same would be true of the closing costs.

When finished with these the loan account balance would be the what you actually got the loan for, or if you were working in another account it should balance to zero.

P.S. If you are going to do this in the loan account when setting up the loan account in Quicken I would do with the manual loan account since you can't put in transactions in an automatically downloaded loan account. What's more I would set it up for the actual loan amount to get all the calculations correct. I then first adjust the opening balance to be "more negative" by the amount of these fees/down payment. And then enter these transactions.

unknown

What you said makes sense to me, (Assets - Liabilities = Net Worth), your equity of 67k is the difference between 335k - 268k, so what's wrong? Or am I missing something?

Thanks for chiming in Rich. Yes, that's the math. My issue is that Quicken isn't calculating the $67K down payment into the net worth. Somehow the "asset" transfer isn't calculating into the net worth.

unknown

Where did the $67K come from?

I would image it was a transfer from your checking or savings account.
I would also imaging that you probably have put that in as a withdraw to some category.
You should record it as a transfer from that account to the above account.

But also note if the above account is your house account it isn't how it is normally recorded in Quicken. The balance of a house account in Quicken should be its current value, not your equity in the house. You get the equity in your house by subtracting the loan balance from the house balance. This is why Quicken allows you to link the two, so that it can show them together.

You should either put the closing and such costs into the loan account or use a separate account for recording it.

As in you would for instance start the loan balance $67K higher (negative amount) than the loan amount and the transfer in would zero it out, bring the balance down to the loan amount. The same would be true of the closing costs.

When finished with these the loan account balance would be the what you actually got the loan for, or if you were working in another account it should balance to zero.

Thanks, @QPW...Initially I tried to build all the closing costs into a "Title Escrow" account I created but couldn't get the math to work (most likely user-error). I'll take a whack at your suggestion and see what happens.

Rich_M

What you said makes sense to me, (Assets - Liabilities = Net Worth), your equity of 67k is the difference between 335k - 268k, so what's wrong? Or am I missing something?

As QPW pointed out below, the 67k must have come from somewhere. If this came from a bank account you already track in Quicken, then there will be no change to your net worth because you just moved a cash asset to a real estate asset.

If this money came from a source outside of Quicken, then you will have to include the source in Quicken to see it reflected there.

unknown

What you said makes sense to me, (Assets - Liabilities = Net Worth), your equity of 67k is the difference between 335k - 268k, so what's wrong? Or am I missing something?

Correct. Without going too deep into detail, not all the money for the down payment came from a Quicken tracked account which is where I think the problem is. Thanks for the help.

unknown

What you said makes sense to me, (Assets - Liabilities = Net Worth), your equity of 67k is the difference between 335k - 268k, so what's wrong? Or am I missing something?

If you need money to come from "outside" of Quicken enter the transaction with the category [This Account], where "This Account" is the one you are in.

unknown

Where did the $67K come from?

I would image it was a transfer from your checking or savings account.
I would also imaging that you probably have put that in as a withdraw to some category.
You should record it as a transfer from that account to the above account.

But also note if the above account is your house account it isn't how it is normally recorded in Quicken. The balance of a house account in Quicken should be its current value, not your equity in the house. You get the equity in your house by subtracting the loan balance from the house balance. This is why Quicken allows you to link the two, so that it can show them together.

You should either put the closing and such costs into the loan account or use a separate account for recording it.

As in you would for instance start the loan balance $67K higher (negative amount) than the loan amount and the transfer in would zero it out, bring the balance down to the loan amount. The same would be true of the closing costs.

When finished with these the loan account balance would be the what you actually got the loan for, or if you were working in another account it should balance to zero.

Bear in mind you are not trying to get an account balance that equals the amount of equity in your house. That will come from Quicken combining the totals of your house and loan accounts.

If you are using a separate account for the fees then you want it to zero out.
If you are doing it in the loan account then you have to think of the fees "on top of your loan amount" and start with a bigger amount. And in fact you can think of it as if you didn't have a down payment your loan would be greater, and the adding in of the down payment is reducing it.

Note that the fees don't really belong in the house account at all. They should either be in a separate account or in the loan account if you are thinking of them as "on top of the loan".

As for the down payment, if you do it in the house then you have math that looks like this.

Opening balance: 283K
Down payment: 67K

For a balance of $350K

The 67K transaction can be a split transaction or more transactions that include a transfer, and the [This House Account] kind of balance adjustment for money that comes from the outside. Note that when you get a new value for your house this is exactly how the value will change, with a balance adjustment.

unknown

Where did the $67K come from?

I would image it was a transfer from your checking or savings account.
I would also imaging that you probably have put that in as a withdraw to some category.
You should record it as a transfer from that account to the above account.

But also note if the above account is your house account it isn't how it is normally recorded in Quicken. The balance of a house account in Quicken should be its current value, not your equity in the house. You get the equity in your house by subtracting the loan balance from the house balance. This is why Quicken allows you to link the two, so that it can show them together.

You should either put the closing and such costs into the loan account or use a separate account for recording it.

As in you would for instance start the loan balance $67K higher (negative amount) than the loan amount and the transfer in would zero it out, bring the balance down to the loan amount. The same would be true of the closing costs.

When finished with these the loan account balance would be the what you actually got the loan for, or if you were working in another account it should balance to zero.

I got it all worked out. Thanks for all the help.