Why is the mortgage interest from Quicken different than what the bank charges

The interest rate was 3.375% and the quicken payment is $937.46 and the banks payment is $949.73. If I bring up the register for the loan and try and modify the principal and interest amounts Quicken won' let me modify

Best Answer

  • Mark1104
    Mark1104 Member ✭✭✭✭
    Accepted Answer
    @LongTimeQUser - traditional mortgages (meaning most all 15 year and 30 year mortgages - whether fixed or variable) are based on a 30 day month, meaning the monthly interest is simply the principle * the interest rate / 12.   Then the payment (assuming no escrow) less the interest is the principle paydown.  No adjustment occurs if the date the payment is made each month varies.

    This standard occurred way before the computer age, where trying to determine a monthly amortizing payment on a 30 year mortgage where the number of days could vary each month exceeded the paper and pencils available.  Much simpler to determine the payment per $1,000 of principle at varying interest rates to fully amortize a mortgage over 30 years. 

    Equity Lines of credit  including HELOCs, are most likely based on the number of days between payments (which if your payment varies, then there could be more than 30 days of interest in some monthsd and less than 30 days of interest in other months.  The concept of 'fully amortizing' doesn't necessarily exist for these mortgages. 

Answers

  • The transaction to make a payment is probably in a bank account. If you open the payment transaction in that account, you should be able to modify the principal and interest amounts there.

    I have not confirmed it but I suspect the difference is due to the number of days used by the bank being different from that used by Quicken.
  • Mark1104
    Mark1104 Member ✭✭✭✭
    Accepted Answer
    @LongTimeQUser - traditional mortgages (meaning most all 15 year and 30 year mortgages - whether fixed or variable) are based on a 30 day month, meaning the monthly interest is simply the principle * the interest rate / 12.   Then the payment (assuming no escrow) less the interest is the principle paydown.  No adjustment occurs if the date the payment is made each month varies.

    This standard occurred way before the computer age, where trying to determine a monthly amortizing payment on a 30 year mortgage where the number of days could vary each month exceeded the paper and pencils available.  Much simpler to determine the payment per $1,000 of principle at varying interest rates to fully amortize a mortgage over 30 years. 

    Equity Lines of credit  including HELOCs, are most likely based on the number of days between payments (which if your payment varies, then there could be more than 30 days of interest in some monthsd and less than 30 days of interest in other months.  The concept of 'fully amortizing' doesn't necessarily exist for these mortgages. 
  • gl_wenger
    gl_wenger Member ✭✭
    So I get a statement every month with the break down of the transaction. I therefore have to look at the payment and adjust the principal and interest amounts every month. If extra money is presented that would also make an adjustment on the previous calculation.
  • Mark1104
    Mark1104 Member ✭✭✭✭
    would you would you mind sharing the following from the bank statement? 

    What was the principle balance last month? How much was interest and how much was principle? 

    And this is a fixed rate mortgage ? (Typically 15 or 30 years?) 

    let’s understand how the statement is working before tackling the quicken implications 

    and are you downloading the mortgage transactions from the bank or letting quicken calculate them? 
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