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When you create a mortgage, do you include the down payment in the total loan amount?

Emmett518

I bought a million dollar house. I put down 20% - $200,000, so the mortgage is $800,000.

When I create the mortgage account, do I make the original balance $1,000,000, and then the same day as the opening, deposit the down payment to reduce the amount owed to $800,000, or do I enter the opening as $800,000.

Second, when I make the mortgage payment every month, do I do a split for the mortgage payment and the property taxes, or does Quicken automatically know what chunk of my monthly payment is principle and interest, and which chunk is property taxes?

Third, do closing costs figure into the mortgage account, or is that just an expense paid out of my checking account?

Thanks

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NotACPA

The $200k is a transfer from your checking account to your HOUSE (or whatever you call it) account.

The $200k has nothing to do with your mortgage amount, only the amount that you borrowed, $800k counts.

The $800k is, likewise, a transfer ... but this time from your mortgage account to the house account.

Q's mortgage wizard is very accurate and can help you set up the monthly payments.

Chris_QPW

Note this is for a "manually entered loan account", not one downloaded. And I personally would never use the online/downloaded feature in Quicken because it is way too restrictive, no loan account register for instance.

The mortgage should be for the amount you borrowed.
When you create the loan Quicken create a reminder that should go into your checking account (or whatever account is paying the loan). The reminder is special in that it calculates the interest based on the current balance of the loan. So, the mix between the principal and the interest is different each month.

I think the best way to set this up would be to setup the loan for $800,000, and if you want to account for the $200,000 say coming out of your savings account what I would then do is go into the loan account and change the opening balance to $1,000,000 and add a transfer for the same date with the $200,000 coming from the savings account. A similar thing could be done for the closing costs if you would like. Say, do a transfer in from the payment account and then categorize them in the loan account as another split transaction. Or you could just categorize them in the payment account.

Emmett518

> @NotACPA said:
> The $200k is a transfer from your checking account to your HOUSE (or whatever you call it) account.The $200k has nothing to do with your mortgage amount, only the amount that you borrowed, $800k counts.The $800k is, likewise, a transfer ... but this time from your mortgage account to the house account.
> Q's mortgage wizard is very accurate and can help you set up the monthly payments.

There appear to be two accounts. One is the loan, which reduces with every payment, and one the account that shows the deposits. Which house are you referring to?

And when the mortgage gets paid, does Quicken know how much of that is interest and how much is principle?

Emmett518

> @Chris_QPW said:
> Note this is for a "manually entered loan account", not one downloaded. And I personally would never use the online/downloaded feature in Quicken because it is way too restrictive, no loan account register for instance.
>
> The mortgage should be for the amount you borrowed.
> When you create the loan Quicken create a reminder that should go into your checking account (or whatever account is paying the loan). The reminder is special in that it calculates the interest based on the current balance of the loan. So, the mix between the principal and the interest is different each month.
>
> I think the best way to set this up would be to setup the loan for $800,000, and if you want to account for the $200,000 say coming out of your savings account what I would then do is go into the loan account and change the opening balance to $1,000,000 and add a transfer for the same date with the $200,000 coming from the savings account. A similar thing could be done for the closing costs if you would like. Say, do a transfer in from the payment account and then categorize them in the loan account as another split transaction. Or you could just categorize them in the payment account.

Do you make that opening balance change in the edit terms button ?

NotACPA

Emmett518 said:

> @NotACPA said:
> The $200k is a transfer from your checking account to your HOUSE (or whatever you call it) account.The $200k has nothing to do with your mortgage amount, only the amount that you borrowed, $800k counts.The $800k is, likewise, a transfer ... but this time from your mortgage account to the house account.
> Q's mortgage wizard is very accurate and can help you set up the monthly payments.

There appear to be two accounts. One is the loan, which reduces with every payment, and one the account that shows the deposits. Which house are you referring to?

And when the mortgage gets paid, does Quicken know how much of that is interest and how much is principle?

There's sometimes 4 accounts involved, plus an expense category.

Your checking account, from which you make payments,

Your Loan account, where the balance is reduced (moves towards $0) with every payment,

Your HOUSE account, the actual property that you own and

Your Escrow account, if your lender requires such.

There's also the EXPENSE category for the interest component of each payment.

For a conventional mortgage, Q's Mortgage Wizard can calculate the principal vs interest amortization, and you can add in any required escrow payment. The formula for the Prin/Int split is well known and easily calculated.

Emmett518

> @NotACPA said:
> There's sometimes 4 accounts involved, plus an expense category.Your checking account, from which you make payments,Your Loan account, where the balance is reduced (moves towards $0) with every payment,Your HOUSE account, the actual property that you own andYour Escrow account, if your lender requires such.There's also the EXPENSE category for the interest component of each payment.
> For a conventional mortgage, Q's Mortgage Wizard can calculate the principal vs interest amortization, and you can add in any required escrow payment. The formula for the Prin/Int split is well known and easily calculated.

I have only two accounts under property and debt.

Chris_QPW

Emmett518 said:

Do you make that opening balance change in the edit terms button ?

No, you go to the loan account and change it in the register.

Chris_QPW

Emmett518 said:

I have only two accounts under property and debt.

The third account for you would be the checking account, which isn't under property and debt.
It sounds like you don't have the fourth account which would be the escrow account.

Chris_QPW

P.S. Even though strictly speaking an escrow account might have been used for the down payment and fees and such one might choose to put them in either the loan account or the checking account and just avoid create yet another account that isn't going to be used after that. And note that account would be manual entry account, probably a liability account.

When I did one of my refinances of my loan, I did use such an account, but at another time I just wasn't into putting in all the details and choose not to and just did it in the loan account. I would think the person that really needs the escrow account would be one that builds up money to pay off things like property tax. Where you would want to keep such information in a separate account to be sure it is adding up correctly before the actual payment/transfer to pay for the property taxes. For me I never had that, I get the bills at the end of the year and then pay them out of my checking account when they are due.

Emmett518

> @Chris_QPW said:
> No, you go to the loan account and change it in the register.

When I click on the loan account, a dashboard shows up. Not a register.

Chris_QPW

Emmett518 said:

> @Chris_QPW said:
> No, you go to the loan account and change it in the register.

When I click on the loan account, a dashboard shows up. Not a register.

That means that you set it up for downloading instead of a manual account. In that case, all bets are off. You don't have a register to do any kind of changes in.

The deal with automatically downloaded loan accounts is all the information comes from the financial institution and can't be changed, and they have no way to keep manual and automatic downloads in sync so they don't show the register.

If you like you can go to the Account Details -> Online Service and turn off downloading but note you will not be able to turn if back on if you do that (would require adding a new account).

Downloading transactions in a loan account that gets one transaction a month and basically can be tracked from the checking account download/reconcile is not a very useful function in my opinion, but each to his own.