What is causing mortgage payment to automatically adjust the principal payment?

When I enter a mortgage payment as a split, something is adjusting the principal payment causing that part of the payment to zero out when it clears. What is causing the auto adjustment? It is causing my mortage balance to never reduce. :)

Best Answer

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited July 6 Accepted Answer
    "I created the loan through Quicken, but connected to the bank to complete the details."
    A bit of information not mentioned in the earlier post.
    "In the split category box it has the name of the loan account in brackets."
    I assume - correct me if I'm wrong - that this "split category box" is referring to the entry made in the checking Account.
    "It posts as a payment,"
    Posts where?  Over in the loan's register?
    "but when it clears a reversal adjustment is added."
    Clears where?  In the checking Account.  In the loan Account's register?
    It sounds to me like this might be a "connected", (i.e., "downloading") loan since I'm not aware of any aspect of a manual loan, (i.e, "not downloading"), where you can "complete the details" by connecting the loan to the bank.
    This is all confusing because with a connected loan there is no loan register you can look at and affect.  Basically, with a connected loan, the "principal payment" recorded in the checking Account is to a Category and the reduction of the loan over in the loan's Account is handled by the servicer downloading this information.  The checking Account entry posts the principal as a current period expense - which it isn't - and the download from the servicer lowers the principal balance of the loan without affect cash in the checking Account. 
    So you get two erroneous entries.  The checking Account entry "magically" reduces your net worth - that's the effect of calling the principal payment an"expense."   The "no effect on cash" reduction of the loan's balance in the Loan Account reverses that downward adjustment by "magically" increasing your net worth.  A real "two wrongs" do make a "right" situation.
    If my assumption that this is a connected loan is correct then the entry in the checking Account - the one with the square brackets around the loan Account's name - should have no effect on anything because there's no loan register to post the principal to.  (Though I'd expect Quicken should say something to you about this.)  And I don't see how having the payment "clear" - again I'm assuming this is happening in the loan Account - would cause the servicer to send the Account some sort of reversing entry.
    Connected loans seem to be fraught with problems and I'd guess most SuperUsers would suggest NOT having a connected loan.
    Maybe you can post some screen shots of what you're seeing?

Answers

  • craigdred
    craigdred Windows Beta Beta
    Did you create the Mortgage payment through the LOAN directly? 
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited July 5
    Sounds to me like you might be entering the principal portion of the payment as a "Category" (i.e., an "expense" - which it's not) instead of as a "Transfer" to the loan Account.  In the Category box for the principal portion of the payment it should read [Name of Loan Account]."  The name of the loan Account should be surrounded by the square brackets.
  • RonRadio
    RonRadio Member
    I created the loan through Quicken, but connected to the bank to complete the details. In the split category box it has the name of the loan account in brackets. It posts as a payment, but when it clears a reversal adjustment is added.
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited July 6 Accepted Answer
    "I created the loan through Quicken, but connected to the bank to complete the details."
    A bit of information not mentioned in the earlier post.
    "In the split category box it has the name of the loan account in brackets."
    I assume - correct me if I'm wrong - that this "split category box" is referring to the entry made in the checking Account.
    "It posts as a payment,"
    Posts where?  Over in the loan's register?
    "but when it clears a reversal adjustment is added."
    Clears where?  In the checking Account.  In the loan Account's register?
    It sounds to me like this might be a "connected", (i.e., "downloading") loan since I'm not aware of any aspect of a manual loan, (i.e, "not downloading"), where you can "complete the details" by connecting the loan to the bank.
    This is all confusing because with a connected loan there is no loan register you can look at and affect.  Basically, with a connected loan, the "principal payment" recorded in the checking Account is to a Category and the reduction of the loan over in the loan's Account is handled by the servicer downloading this information.  The checking Account entry posts the principal as a current period expense - which it isn't - and the download from the servicer lowers the principal balance of the loan without affect cash in the checking Account. 
    So you get two erroneous entries.  The checking Account entry "magically" reduces your net worth - that's the effect of calling the principal payment an"expense."   The "no effect on cash" reduction of the loan's balance in the Loan Account reverses that downward adjustment by "magically" increasing your net worth.  A real "two wrongs" do make a "right" situation.
    If my assumption that this is a connected loan is correct then the entry in the checking Account - the one with the square brackets around the loan Account's name - should have no effect on anything because there's no loan register to post the principal to.  (Though I'd expect Quicken should say something to you about this.)  And I don't see how having the payment "clear" - again I'm assuming this is happening in the loan Account - would cause the servicer to send the Account some sort of reversing entry.
    Connected loans seem to be fraught with problems and I'd guess most SuperUsers would suggest NOT having a connected loan.
    Maybe you can post some screen shots of what you're seeing?
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