nav[aria-label="Primary Navigation"] { padding: 0; & ul { list-style: none; width: 100%; display: flex; flex-direction: row; justify-content: start; align-items: start; gap: 30px; padding: 0; & li { margin: 0; } & ul li { list-style: none; } } }

Has anyone figure out how to track a "recasted" mortgage in quicken?

RJ Puckett

In this scenario, a principle payment is made and the mortgage companies recalculates the loan payment based on the original term - loan remains a 30 yr term w/same interest rate.

Find more posts tagged with

Mortgage

Comments

Tom Young

If I'm understanding what you're saying here, each time you make a principal payment the loan balance after the payment becomes, in effect, a new 30-year loan? That is, you always have a 30 year loan no matter how many payments you've made, but with a "beginning" balance that gets smaller and smaller, until the "beginning balance" gets to $0?

If I've got that right, then I have to say I've never heard of such a thing. Can you provide a link, somewhere on the internet, that describes this sort of loan.

As far as actually doing this in Quicken I suppose one approach is to each month set up a "new" 30-year loan in Quicken with the balance of the "old" loan transferred to the "new" loan, zeroing out the old loan. Seems like a lot of work for not much reward since the future payments beyond the first payment of each "new" loan are meaningless to you.

I'd simply set up a manual Liability Account and post the actual principal payments to that Account.

Of course if this really is more or less a one-time event where after paying some (maybe large) amount of principal the lender sets you up with a new 30-year loan at the same interest rate, then that's more doable. Set up your new 30-year loan in Quicken. As part of the setup Quicken will ask about the new loan's opening balance, (presumably the same amount as your old loan after the principal payment), and will make an Opening Balance entry in the new loan Account for the new loan. When you've got the new loan Account all established, delete the Opening Balance entry, transfer the balance of the old loan into the new loan (zeroing out the old loan) and all should be good.

RJ Puckett

I'm sorry for not provided a better definition. "A mortgage recast is when you make a lump-sum payment toward the principal balance of your loan. Your lender will then re-amortize your mortgage with the new (lower) balance. The idea is that you can lower your monthly payments since your principal went down, but your interest rate and term remain the same. Most commonly, homeowners recast a mortgage when they’ve purchased a new home but haven’t sold their old one. Once the previous property has been sold, then the homeowner can use the proceeds of the sale toward a recast of their new mortgage."

For example, the original loan is 30 yrs or 360 payments, a large lump sum payment (say 25%) is paid to the principle 6 months later. The loan is re-amortized at the new lower balance, with the same interest rate, using the remaining term 29.5 yrs or 354 payments. The required monthly payment (P&I) is lowered as compared to when a simple principle lump-sum payment is paid toward principle.

Here's a link to Rocket Mortgage description, which also includes a re-cast calculator:
https://www.rocketmortgage.com/learn/recast-mortgage

When you make a lump sum payment to the principle in Quicken, the total payment (P&I) remains the same. I was unable to find a option in Quicken to re-amortize the loan for a re-cast.

I tried to mimic a mortgage recast by refinancing the loan in quicken. I applied the lump-sum payment to the original loan and then refinanced the loan at the new lower balance, same interest rate, and the reduced term (e.g., 29.5 yrs.) The recalculated P&I was close to my actual new payment, but it was off by 2-3 % (~$50).

I could use this approach and adjust my actual P&I paid to match my mortgage statement. It's just more work. I'm a firm believer that SW applications that we pay for should work for us and we shouldn't work SW.

Tom Young

"I tried to mimic a mortgage recast by refinancing the loan in quicken. I applied the lump-sum payment to the original loan and then refinanced the loan at the new lower balance, same interest rate, and the reduced term (e.g., 29.5 yrs.) The recalculated P&I was close to my actual new payment, but it was off by 2-3 % (~$50). "

I think the approach here that should work is the one I outlined in the last paragraph of my answer above.

Create a new loan with an appropriate Opening Date, Original Balance, (presumably the same amount as your old loan after the lump-sum payment), Original Length, etc. That should result in an amortization schedule that's consistent with the new loan. Then, either delete the Opening Balance entry made by the Quicken loan "wizard" and, using the new loan's Opening Date, transfer the old loan's ending balance into the new Account, or, go into the old loan's register and make "Decrease" entry in the amount of the outstanding loan with the "Category" being the same as the name of the old loan Account, surrounded by square brackets (e.g., [Old Loan Account Name]). The latter method will zero out the old loan without affecting any other Account in your file.