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

trudi.cooper44

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.

Sherlock

There are many valid ways to handle this scenario.  For example, you may create a split transaction that receives a transfer of the entire new loan balance and distributes the funds appropriately to payoff the remaining interest, principal, closing costs, etc..

Mark1104

use the closing statement as your guide to reconcile the cash movement. 

Each entry on the closing statement technically requires an entry in Quicken. 

Start by setting up a liability account for the new mortgage; then post an entry to match the amount of the new mortgage and two additional entries to zero out the two mortgages; the remaining entries to net to the cash is what is on the closing statement. 

trudi.cooper44

Thanks for your suggestions, very helpful. I'm somewhat embarrassed that I'm having trouble seeing the necessary transactions in my mind. In a test version of Quicken, I set up the liability account, called "New Mortgage". Is it in this account that I record the new mortgage money received (e.g., $150K from ABC Mortgage Company), then disbursals to the "Old Mortgage" (e.g., $107K) and home equity loan ($30K), $1600 as cash back to us (remaining escrow, our application fee, + differences in interest) and the remainder as closing costs? After mulling this over for a few days, this scenario is what I came up with. Does this seem valid? Thanks again for your suggestions.

Mark1104

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, 

Sherlock

trudi.cooper44 said:

Thanks for your suggestions, very helpful. I'm somewhat embarrassed that I'm having trouble seeing the necessary transactions in my mind. In a test version of Quicken, I set up the liability account, called "New Mortgage". Is it in this account that I record the new mortgage money received (e.g., $150K from ABC Mortgage Company), then disbursals to the "Old Mortgage" (e.g., $107K) and home equity loan ($30K), $1600 as cash back to us (remaining escrow, our application fee, + differences in interest) and the remainder as closing costs? After mulling this over for a few days, this scenario is what I came up with. Does this seem valid? Thanks again for your suggestions.

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.

trudi.cooper44

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.