I'm refinancing my mortgage, going with a new lender

Question

Sorry if this is under the wrong category, I couldn't find an appropriate one.  So I'm refinancing my mortgage, and the new loan amount will pay off a home equity loan in addition to the original mortgage.  I am able to set up the new mortgage account, but I don't know what entries to make to zero out the original mortgage and the home equity loan.  The closing is tomorrow (7/12), the first payment won't be due until September, I'm guessing.  Any suggestions would be appreciated!  Thanks in advance.

trudi.cooper44 · Answer

AHA!  Since I plan on depositing the $1600 cash we are getting back into my checking account, it makes sense to record the receipt of the $150K mortgage money and various disbursements into my checking account.  I appreciate you both taking the time to help me out.  Many thanks.

Sherlock · Answer

The "New Mortgage" liability (aka loan) account should not receive the funds from the "ABC Mortgage Company".  The opening transaction in the "New Mortgage" account is a withdrawal of funds establishing the principal amount owed.  This usually appears as an "Opening Balance" self-referencing transfer transaction.  You may change the "Opening Balance" payee to "ABC Mortgage Company" if that helps.

What I was suggesting is to change this self-referencing transfer to a transfer to your payment account.  In the payment account, the transaction would be changed to a split transaction with the additional entries to distribute the proceeds appropriately.  This approach keeps the "spending" in a spending account.

Mark1104 · Answer

yes, that makes sense.....on the 'cash back to us'.....some users would probably tease that out into more entries, but it doesn't have to be so.... you idea will work perfectly,