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Why do loan accounts incorrectly have a balloon balance

kcastle129

I've entered our three rental property mortgages. I enter all transactions manually instead of downloading from mortgage holder. Two of the three show balloon payments even though the mortgages do not in actuality have balloon payments. I tried changing the origination date to one day before the very first payment. It didn't change the balloon payment. Why is this? How do I correct it?

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NotACPA

The most likely reason is that the loans were, in some way, set up incorrectly.

BUT, we'd need to see to loan setup screen in order to help further. We'd also need to know, for each of those loans, what the specs are supposed to be.

kcastle129

> @NotACPA said:
> The most likely reason is that the loans were, in some way, set up incorrectly.BUT, we'd need to see to loan setup screen in order to help further. We'd also need to know, for each of those loans, what the specs are supposed to be.

Hi there, I've attached a screen shot of how I set it up. Hope you can access it. If so, let me know if you need any additional info. Thanks for your help!

image.png

NotACPA

Was there a grace period at the start of the loan ... when you didn't have to make any payments?

Because, according to Q's loan calculator and it's amortization schedule, the current balance that you show would be achieved with the 184th pmt. I.E. 15 years and 4 months.

BUT, it's been 15 years and 8 months since the "Origination date" shown.

Also, your "Current Balance" differs by $0.02 from Q's calculations. Have you been reconciling this loan to your monthly statements?

And a screen shot of the "Projected payment" graph, showing the Balloon payment and the associated "Loan Balance" to the right of that graph would be helpful.

kcastle129

> @NotACPA said:
> Was there a grace period at the start of the loan ... when you didn't have to make any payments?Because, according to Q's loan calculator and it's amortization schedule, the current balance that you show would be achieved with the 184th pmt. I.E. 15 years and 4 months.BUT, it's been 15 years and 8 months since the "Origination date" shown.Also, your "Current Balance" differs by $0.02 from Q's calculations. Have you been reconciling this loan to your monthly statements?And a screen shot of the "Projected payment" graph, showing the Balloon payment and the associated "Loan Balance" to the right of that graph would be helpful.

Hi there, I don't remember if there was a grace period but it doesn't seem likely it would be for apprx 5 months which is the balloon amt. I think it more likely I haven't set it up correctly in Quicken.

I've attached the Projected Payment graph per your request. Hopefully, that will give you the info needed to solve my mystery! If you need more info please let me know. Thank you for your help with this.

image.png

NotACPA

Ok, there's something screwy going on here. Your most recent image states "172 Payments remaining". Which would agree with my earlier observation that it has been 15 yrs and 8 months since loan origination.

BUT, there's still the issue that the Amortization is only for 15 yrs and 4 months ... leaving 14 yrs and 8 months (or 176 payments). 4 more payments than in your 2nd graph ... and the reason why you've got a balloon.

SO, did you ever miss a payment? Underpay? Grace period at start of loan? Apply the principal payment to a Category instead of it being a transfer to the loan account. Because, mathematically, those are the only reasons that I can think of for the balloon.

I'll suggest that you use the Loan Calculator in Q (PLANNING, Calculators, Loan Calculator) and input the parameters of your loan and then click "View Schedule".

Print of that schedule, and then compare it's Amortization and Balance figures with what's in your payments and Loan account. That should point you to where the problem began and maybe provide ideas re: a fix.

kcastle129

> @NotACPA said:
> Ok, there's something screwy going on here. Your most recent image states "172 Payments remaining". Which would agree with my earlier observation that it has been 15 yrs and 8 months since loan origination.BUT, there's still the issue that the Amortization is only for 15 yrs and 4 months ... leaving 14 yrs and 8 months (or 176 payments). 4 more payments than in your 2nd graph ... and the reason why you've got a balloon.SO, did you ever miss a payment? Underpay? Grace period at start of loan? Apply the principal payment to a Category instead of it being a transfer to the loan account. Because, mathematically, those are the only reasons that I can think of for the balloon.I'll suggest that you use the Loan Calculator in Q (PLANNING, Calculators, Loan Calculator) and input the parameters of your loan and then click "View Schedule".Print of that schedule, and then compare it's Amortization and Balance figures with what's in your payments and Loan account. That should point you to where the problem began and maybe provide ideas re: a fix.

You've given me several avenues to explore. I'm hopeful with with all your input I'll figure it out. Thank you so much for your time!