Best way to close out a paid off Mortgage?

Dave461

Hey gang-

We just finished a refinance in September and our old mortgage is now paid off. What is the best way to close it out in Quicken? I tried the menu item "Mark Mortgage as Closed", but I get an error saying "You cannot close an account while it has any scheduled, future-dated, or pending payment transactions".

Thanks!

Tom Young

This is a "pure accounting" answer because I don't know how Quicken for Mac is programmed, but I do know how accounting works.

When you refinance, the old loan gets paid off and shows as "$0" on your balance sheet and a new loan appears on your balance sheet in the amount of the new loan.  In the very simplest situation, (and it's never that simple), you pay off a loan that has a high interest rate by taking out a loan in the exact same amount that has a lower interest rate.  The accounting entry for that is:

Debit (decrease) OLD MORTGAGE LOAN ACCOUNT    $XXX,XXX
Credit (increase) NEW MORTGAGE LOAN ACCOUNT   $XXX,XXX

If you do a "cash out" refi then the accounting is slightly different

Debit (decrease) OLD MORTGAGE LOAN ACCOUNT    $XXX,XXX
Debit (increase) CHECKING ACCOUNT                           $  YY,YYY
Credit (increase) NEW MORTGAGE LOAN ACCOUNT   $ZZZ,ZZZ

In this case $XXX,XXX + $YY,YYY = $ZZZ,ZZZ.

I guess the point is that at its heart Quicken is a "double entry" accounting system so you can't (or at least shouldn't) just willy-nilly "close" Accounts and have them "magically" disappear..  From the error you've quoted it sounds like the first thing to do is to delete "scheduled, future-dated and pending payment transactions."  You can understand how an accounting program would want to know "Hey!  What do I do with these entries that are all Teed Up but you want to delete the Account that these entries are keyed to?"

Once you get these items eliminated you should be able to make whatever accounting entries that are necessary to get the old loan zeroed out and get the new loan established, with "cash out" or "fees" or whatever servicing as the balancing entries.

Dave461

Thanks Tom! I actually did follow your accounting based reply.

I can't help thinking though with the huge volume of Refis this year that we don't have hundreds (thousands?) of Quicken users here with some experience with Quicken tips, tricks, or shortcuts for this. Anyone?

I don't think it would even be a Mac vs. Windows thing since the two are so very close to parity these days.

EDIT: Found this over in the Windows section- it makes sense and going to give it a try tomorrow:
https://community.quicken.com/discussion/comment/20087981#Comment_20087981

Tom Young

I guess I should have asked up front: is this a "manual" loan, (you make split payments in your checking Account and the principal portion of the payment is entered into the loan Account), or is this a loan where principal payments are downloaded directly from the lender into the loan Account?