How to fix past mortgage payment splits?

NorbertD

I recently discovered that I had a single payment of extra principal towards my mortgage, back in 2016. When I applied it, the reduced principal remaining caused my last 4+ years of mortgage payments to have the wrong splits between principal and interest, since they were based on the principal remaining before that payment was applied. What is the best way to fix those past payments? Is there a better way than manually editing all 50 of them?

NorbertD

q_lurker, I actually took your first suggestion. I deleted all the payments since that principal-only payment, then had Quicken re-enter the monthly payments. I found that I could do that pretty easily by simply switching my mortgage account from entering scheduled Loan Reminders to using a memorized payee (mortgage account view -> Monthly Payment edit -> Payment Options). Then in my checking account register I'd just enter the date and use the name of the mortgage account as the Payee, and Quicken would fill out the rest, including the principal vs interest split. Took maybe 15 minutes to fix 4 years of payments.

Interestingly, since my payment includes escrow Quicken initially wanted to apply the principal + escrow amount to principal. Every time I entered the mortgage's memorized payee Quicken would pop up a box for me to verify the principal and interest amounts, and for the first two payments the principal amount included the escrow amount. So I manually fixed the principal amount for those first two payments, then Quicken seemed to "catch on" and did all the rest of them right, applying all the leftover payment (beyond the principal and interest amounts) to escrow.

The only other wrinkle is that my escrow amount changes each year. Before I started I edited the mortgage payment to use the escrow amount from the time of the first payment I needed to enter (12/2016). Then I entered the payments in my checking account register until I reached February (when the amount changes each year), then navigated back to my mortgage account and updated the payment to use the adjusted escrow amount.

Eventually got them all in and reconciling, and switched my mortgage account back to using scheduled loan reminders going forward. Thanks for the suggestion!

Quicken Francisco

Hello @NorbertD

Thank you for reaching out on the community and telling us about your issue. I do apologize for the issue you're having. I'm wondering here how you might have added the payment? Did you go to the loan register and add it as a transaction or did you do it in a different way? We should be able to add an extra transaction without it adjusting the rest of the transactions ideally. Another thing is you could just add it for today rather than prior and it shouldn't adjust any of the previous transactions either.

Either way please let us know if this helps you out. If not we'll see what we can try next.

Thanks,

Quicken Francisco

Tom Young

Quicken really should have handled this for you I'd think.  Did that single payment of extra principal actually get reflected properly over in the loan Account.

Offhand I can't think of any way of catching up except by manually editing, but you can make this process easier and go faster by entering the payee's name in the search box in the checking Account used.  At least those will bring all those payments together in the register, cutting down on the "scroll and search" activity.

NorbertD

Thanks for the help. I added the principal-only transaction by simply categorizing a payment from my bank account as a transfer to the mortgage account. But I did so after 4 years of regular mortgage payments to that same mortgage had been recorded. It doesn't appear that Quicken adjusts the principal vs interest values for those subsequent 4 years of payments, so Quicken thinks I paid less principal and more interest than I did.

I tried adding the contribution as a new transaction within the mortgage account register, but got the same results.

I suppose I can add a dummy payment to correct the principal and then my payments going forward should have the correct principal & interest values, but my interest paid for 2016-2020 will always be off. Shouldn't Quicken adjust those payments for me?

Tom Young

"Shouldn't Quicken adjust those payments for me? "

I'd think so since Quicken is supposed to be able to handle extra principal payments.  One thing Quicken did - back in 2012 or 2013 I believe - was impose a strict order for mortgage payment splits:

and perhaps that's the origin of the problem?  (I thought it was completely silly on Quicken's part to introduce this, particularly it's not really made clear in "Help."  Any "extra" principal payment no matter where it is in a split transaction should have the exact same effect of reducing the principal and forcing a "forward" recalc.)

"I suppose I can add a dummy payment to correct the principal and then my payments going forward should have the correct principal & interest values, but my interest paid for 2016-2020 will always be off."

I'd probably opt for a 12/31/XX entry in each of the years that got the principal reduction and interest expense correctly stated for the year.

q_lurker

Shouldn't Quicken adjust those payments for me?

After the fact?  Change 12 transactions in each of 2017, 18, 19 and 20 to reflect a new transaction added in 2021 that backdated to 2016.  Not a chance of that happening.  The relationship is a one-time calculation.  Once done, its done.  Not a dynamic calculation where Quicken is always watching for adjustments to any component.  

Now if you were to delete those subsequent transactions and have Quicken re-enter them according to the 'proper' schedule as if each being paid for the first time, I could see that as possible. 

I like Tom's correction of an annual adjustment -- a transfer from checking account to the loan account because because you paid more principle that year than the monthly payments credited you and a 'Deposit' into checking account for that same amount assigned to the expense category 'Mortgage Interest' (however you have that identified).     

NorbertD

q_lurker, I actually took your first suggestion. I deleted all the payments since that principal-only payment, then had Quicken re-enter the monthly payments. I found that I could do that pretty easily by simply switching my mortgage account from entering scheduled Loan Reminders to using a memorized payee (mortgage account view -> Monthly Payment edit -> Payment Options). Then in my checking account register I'd just enter the date and use the name of the mortgage account as the Payee, and Quicken would fill out the rest, including the principal vs interest split. Took maybe 15 minutes to fix 4 years of payments.

Interestingly, since my payment includes escrow Quicken initially wanted to apply the principal + escrow amount to principal. Every time I entered the mortgage's memorized payee Quicken would pop up a box for me to verify the principal and interest amounts, and for the first two payments the principal amount included the escrow amount. So I manually fixed the principal amount for those first two payments, then Quicken seemed to "catch on" and did all the rest of them right, applying all the leftover payment (beyond the principal and interest amounts) to escrow.

The only other wrinkle is that my escrow amount changes each year. Before I started I edited the mortgage payment to use the escrow amount from the time of the first payment I needed to enter (12/2016). Then I entered the payments in my checking account register until I reached February (when the amount changes each year), then navigated back to my mortgage account and updated the payment to use the adjusted escrow amount.

Eventually got them all in and reconciling, and switched my mortgage account back to using scheduled loan reminders going forward. Thanks for the suggestion!