Mortgage/Loan Balloon amount gets reset, affecting payment schedule

DarrelM

The Balloon amount for my Mortgage was reset, so my payment schedule from the rest of the term is way off, since it is assuming I'm paying off the whole mortgage within the one term. This happened back in 2018 and I had redo the account, which is very annoying. Does anyone know of a way to correct what Quicken did to this redone account? How do I re-enter the balloon amount and recalculate the payment schedule?

Tom Young

Since actually entering an amortizing loan with a balloon payment at the end doesn't seem to be covered in Quicken Help, I had to ask how to setup a balloon loan in the first place.  The answer is that you first indicate a term that runs from loan origination to the actual (balloon) payoff.  Then you replace the calculated loan payment based on that term and the stated interest rate with the actual loan payment (presumably lower than the calculated payment) specified in the loan.  That combination provides for some amortization of the loan over the loan term and leaves a balloon amount to be paid at the end of the term.

You say "The Balloon amount for my Mortgage was reset" so I have to think that something got changed from the time of the (hopefully correct) setup to the time of the change - maybe the loan called for a change in the monthly payment at some point or a change in the interest rate?

If the terms of the loan do provide for either payment or interest changes over the life of the loan it seems like you'll have to keep setting this loan up anew each time something changes, creating a new loan term (from "now" to balloon), using a new original amount ("today's" loan balance) and whatever the current interest rate is "now."

DarrelM

Yeah I followed the steps you mentioned when I originally set this up, back in 2017. It isn't linked to an online account, so no outside forces would change the loan terms. In November 2018, this happened once, and I had to re-create the account. It had been fine until mid-March 2021. No changes to the term or anything else... the balloon amount previously calculated was at $0, and the program automatically entered my last two payments, along with the future payment schedule, for the principle to be paid off at the end of the term. If I go back to edit, to hopefully recreate the same situation that you mentioned, it doesn't let you create a situation with a balloon amount.

I engaged online support yesterday and they suggested restoring from a backup... strangely, an earlier backup produced the same problem, so I just ended up re-creating the account yet again. This of course introduces yet another bug in the program...

If I create a mortgage account now, but start it in September 2017 and set it for 5 years, Quicken doesn't create an account with a payment end date of September 2022, but March 2026--5 years from *now*, not 5 years from the start of the mortgage. If I try to use a term to make it end at the right time (~68 bi-weekly payments), it gives an error saying the mortgage would already be paid, since 68 bi-weekly payments from September 2017 is before now (I don't know exactly when).

The Mortgage tracking aspect of Quicken sorely needs attention. I asked the online support to submit a Feature Request to fix this, and she agreed, but I don't have much confidence I'll see anything... this has been an issue for as long as I've used Quicken...

I've already recreated the account and things are "fine" now. The online support did give me the steps to run the "Super Validation" option to check for repairs (wasn't aware of it, using Shift+CTRL+"Validate & Repair")... my file was first created in 2008 and maybe it needed it.

Tom Young

"I engaged online support yesterday and they suggested restoring from a backup... strangely, an earlier backup produced the same problem, so I just ended up re-creating the account yet again. This of course introduces yet another bug in the program..."

In a test file I tried to create a loan as of 9/1/17, with an original loan balance of $100,000, a term of 10 years, an interest rate of 4%, compounding and paid monthly.  Then I entered a monthly payment of $600 instead of the $1K+ calculated by Quicken.  Although I eventually got "close" to the right answer, the setup was never completely correct.

As far as I can tell the only way to get the correct answer here where you're forced to resetup a balloon loan sometime after the fact is to use "today's" information.  In your case that would be using numbers - original loan amount, length of term, etc. - that reflect the loan as of "today."  Is that what you did?

DarrelM

Yeah, that's what I ended up doing. And I ended up with the situation similar to one of your screenshots, where in your example, the balloon due date is 10 years from now, not 10 years from the start of the mortgage. But my payment schedule, after recreation, isn't as far off as what you're showing... it has tended to be off by only $1 or so in principle, per payment.

DarrelM

Actually, sorry, correction... I re-set the loan with the original start date and terms, and my balloon due date is the only major wrong thing... the P+I balance is just off a bit, but I think that is due to the compounding interest options available vs. how my bank is doing it. I didn't get the discrepancy that you showed when doing this. It just seems that the loan/mortgage component of Quicken needs a major overhaul.