Lending loan "Balloon Payment" mystery
JeffVandervoort
Member ✭✭
Not sure which is the correct forum section for this...
I'm a seller-financed mortgage newbie, and while a Quicken user since the mid-1990s, a Quicken Lending Loan newbie.
Early in 2021, borrower was late on payments, and also made some partial payments. Payments were recorded in Quicken as of date of receipt (after the 1st of the month) and partial payments were posted to escrow, interest and principal, in that order.
Coincident with the late payments, the final "balloon payment" increased to nearly double the original amount of the final payment. I figured at the time that this was the magic of compound interest applied across most of the life of the loan.
June through August payments have been made several days early. If my hypothesis was correct, the balloon payments would have declined.
But they haven't.
I'm trying to understand what REALLY caused the balloon payment to change. If it's my mistake, I want to correct it.
When I look at the Payment Schedule, past payments appear correct, with 2 anomalies. I'd love to attach a redacted version but there doesn't seem to be a way to do that.
The anomalies are 2 lines "Payment" lines for 1/1/2021 and 2/1/2021. They show the loan interest in the left column, "Payment:" in the "Interest Paid" column, and the amount in the right, "Loan Balance" column is a little more than P+I for 1/1/2021, and the exact amount of P+I for 2/1/2021. I don't know what those lines represent. The remainder show payment number, date, principal paid, interest paid, and loan balance.
So my two, possibly-related, questions are: What are the 2 "Payment" lines telling me, and what caused the balloon payment to increase?
I'm a seller-financed mortgage newbie, and while a Quicken user since the mid-1990s, a Quicken Lending Loan newbie.
Early in 2021, borrower was late on payments, and also made some partial payments. Payments were recorded in Quicken as of date of receipt (after the 1st of the month) and partial payments were posted to escrow, interest and principal, in that order.
Coincident with the late payments, the final "balloon payment" increased to nearly double the original amount of the final payment. I figured at the time that this was the magic of compound interest applied across most of the life of the loan.
June through August payments have been made several days early. If my hypothesis was correct, the balloon payments would have declined.
But they haven't.
I'm trying to understand what REALLY caused the balloon payment to change. If it's my mistake, I want to correct it.
When I look at the Payment Schedule, past payments appear correct, with 2 anomalies. I'd love to attach a redacted version but there doesn't seem to be a way to do that.
The anomalies are 2 lines "Payment" lines for 1/1/2021 and 2/1/2021. They show the loan interest in the left column, "Payment:" in the "Interest Paid" column, and the amount in the right, "Loan Balance" column is a little more than P+I for 1/1/2021, and the exact amount of P+I for 2/1/2021. I don't know what those lines represent. The remainder show payment number, date, principal paid, interest paid, and loan balance.
So my two, possibly-related, questions are: What are the 2 "Payment" lines telling me, and what caused the balloon payment to increase?
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Answers
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Alas, the toolbar depicted in that KB article does not appear in the editor on my screen. The only control offered is an emoji dropdown.0
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Same in Firefox and Edge/Chromium, both up to date.0
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JeffVandervoort said:Alas, the toolbar depicted in that KB article does not appear in the editor on my screen. The only control offered is an emoji dropdown.That, unfortunately, happens to brand new user profiles. It'll take a few more posts until the community software gives you access to the improved text editor.Meanwhile, try to mouse-click drag and drop the file from Windows File Explorer into the Leave a Comment text box.1
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For some reason, the loan program in Quicken thinks you made a change to the loan interest rate, hence the transactions which you call anomalous.I have no idea why Quicken does what it does, but it's quite possible the process gets a little confused when it expects payments to come in like clockwork on the first and has to cope with different amounts or irregular, late or missed payments. Only the programmer who wrote the code could explain what it does. I just know it isn't perfect when it comes to recalculating after each transaction.1
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Hmmm...that's a little disturbing to hear. Interest rate has been unchanged since day one of the loan. Both of the "Payment:" lines show the original, and correct, interest rate.
I've never been late on a mortgage payment in my life, so I don't know how "real" banks handle this. If I can't explain where the increase comes from, I can't ask the borrower to pay it. Especially if (paraphrasing) Quicken doesn't really know what it's doing and should not be relied upon for this. I guess I will need to tell the borrower that the final payment will be the same as the others.
Thanks!0
