Setting up a mortgage I MADE to my daughter

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KVacek
KVacek Member ✭✭

We gave our daughter a mortgage to buy a house. She pays us monthly, with a conventional amortization schedule we set up.

I set it up in Quicken, though there have been some hiccups since I had to do major Windows work in January and foolishly depended on the OneDrive backups that Quicken made, and had lots of manual repair to do.

I had originally found a way for Quicken to do part of this for me, but when I had to repair the backup I wound up restarting her mortgage account. I got behind on doing that and I'm just re-inputting her mortgage payments from that time.

Quicken now won't do the automatic split of principal only against the mortgage balance because I can't record a payment date earlier than today (!?)

If necessary I'll manually go back and update all the months I haven't put into her mortgage account and resume the automation next month.

Meanwhile, is there a way to get Quicken to automate that again, and is there also a way to note each deposit in our account with the split of interest and principal received, or is Quicken just an electric pencil for this?

Thanks!
Karl

Answers

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited August 2023
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    This is what Quicken calls a "lending loan". Please see this Help article for more information

    https://help.quicken.com/pages/viewpage.action?pageId=3217587&exitMobile=true

    It would be a good idea to experiment in a test file or a copy of your working file to make sure you get the settings correct before setting this up in your main Quicken file.

    [edit - further info] You are right that for an existing loan, the setup will not let you specify a starting payment date earlier than today. But once the loan and reminder have been created, you can edit the next due date in the Reminder to match the actual first payment date.

    Please post back if you have further questions.

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  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
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    How did you set this mortgage up in Quicken?

    Since you are the lender Quicken provides an option to set up a loan asset account. It will set up the amortization payment schedule and will set up a recurring Income Reminder with the splits between principal and interest calculated by Quicken. When the reminder is entered and the payment received is matched to it the principal/interest ratio is recalculated (if appropriate) based upon the actual date the payment is received. This information is then visible in both the loan asset account and in various income and expense reports in Quicken. If you want to read more on this process go to Help > Quicken Help > type in How to set up a loan for which I am the lender?

    Quicken Classic Premier (US) Subscription: R55.26 on Windows 11

  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
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    You can virtually time travel by temporarily setting the date on your computer back to the date you originally set up your daughter’s mortgage, open Quicken, and redo the mortgage set up. Then close Quicken, revert the computer date to today’s date, and reopen Quicken.

    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the Quicken Windows FAQ list

  • KVacek
    KVacek Member ✭✭
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    Not sure why I would need to do this, but thank you ! My attempt at changing computer dates to install and use Quicken 2016 - the last version that worked decently - destroyed my "official" backups and I had to eventually redo the entire computer and use the latest real backups I had.

    I manually made all the principal and interest splits in the original 15-year mortgage and it's now inactive.

    I then set up a new 30-year mortgage via the Offline Asset method, selecting the one with the diamond. The Help article someone linked shows an option to convert it into a "lending loan" but I didn't get that option. Nonetheless it went in as an asset - owed to us - and seems fine.

    BUT - I don't want to do all the deposits and splits manually every month. Is Quicken, as I fear, only an electric pencil, requiring me to do all entries manually just as if I were doing this in Excel ? Actually, in Excel I could automate the entries too.

    Maybe I need to stop wasting time with Quicken and just write this all in Excel ???

    Thanks !

    Karl

  • KVacek
    KVacek Member ✭✭
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    BoatManiac said I could set up reminders, but I have no idea what they will be. I told it to put reminders in "the register" for the nest 30 days, but nothing happened that I saw. Nothing in the mortgage's register.

    Sooooo

    How can I proceed to get all the automation to work ?

    Thanks for the help !! I really did minor in Computer Science in the mid-60's and supported lots of PC users and ran networks for minicomputers and PC's and installed and trained on CAD and CAM (mostly Unix, etc) systems over the decades, but none of that helps with today's Quicken.

    Karl

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited August 2023
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    What version and edition of Quicken are you running? I tried the method of converting the asset to a lending loan as described in the Help with a current version of Premier and it worked for me. Here are the steps I followed.

    1. Set up an asset account with a positive balance equal to the loan amount
    2. Date to start tracking = date of loan, unless you want to treat previous payments as a lump sum
    3. Go to the asset account you created and click on the gear at the top right. About half way down the list of options you will see "Convert to a lending loan". Click on that then click on Convert.
    4. Set up the loan details. You can click on Payment details then View payment schedule to see the principal and interest for each payment (the amortization schedule)
    5. Click on Next and set up the payment details. Here you can enter any additional principal payments, etc that are to be included with each payment.
    6. Click Next after reading the info on the Reminder
    7. Set up the Reminder details, including the first payment date you want to track. For the To account, pick the account that will receive the payments (i.e. your checking account)
    8. Read the next page and click Next

    Now if you go to the Bills and Income tab, you should see the Reminders for the current payment due and any earlier payments. These reminders will be for the amount of each payment, with an automatically calculated split for the interest and principal. You can skip any you have already entered manually, or adjust the amounts as needed and accept them.

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  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
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    If you create the loan on the original date and set up the reminders, you can use the reminders to automatically enter all the missing payments with their principal and interest split automatcially calculated. Which should be easier than manually entering all the payments with the splits.

    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the Quicken Windows FAQ list

  • KVacek
    KVacek Member ✭✭
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    I really cannot tell you how I set this up. Sorry - after using QuickBooks for nearly 30 years and Beta testing for them over half that time, running up to 3 corporations in QB simultaneously, Quicken, (especially since 2016 which I wish I could still run), is often just incomprehensible to me.

    That said, I think I set it up as a normal mortgage? I last set it up in early winter, and I just don't remember.

    Somehow I made the principal negative or something. I recall that I had trouble converting it from a liability to an asset, but found some way to do that.

    Part of the fun with Quicken is that it doesn't allow the user to look at other accounts if one is working in a particular register. Or if a dialog box is open. Or the moon is in the wrong phase. So if I don't remember a number or haven't written it down, I have to go get the info and start over. Not using so much scratch paper is a major reason for using a computer, after all.

    I completed the manual entries for her original mortgage terms up to the time that was ended and might be able to close that account once I'm sure I have it right.

    I now need to rewrite the account because she wanted longer amortization so we retatrted it 7/1/2023 on 30-year terms, running 360 more payments. So unless there's a way to communicate that to Quicken without spending too many days I believe I'm starting over.

    If I enter the loan as a suggested, calculating interest till the day of deposit, the interest will be wrong almost always. She drops off a check but I don't make the deposit that moment - it might take me a week or two. And the mortgage is like any normal mortgage - there's a set amortization schedule. If I manually change the date to the first of the month to make the amortization amount appear correct, then my register won't match the account into which I've deposited it.

    I need to use the predetermined amortization, which (thank God) Quicken calculates identically to my Excel spreadsheet, once I got all the exact date, etc assumptions correct. Actual loans have amortization assumptions - payments in advance/arrears, etc. Quicken has whatever it has and doesn't seem to reveal the secret to a mere paying user.

    Sooooo… How do I PROPERLY in the Land of Quicken open the appropriate account so that her mortgage is in as an asset, and I enter the total payment (identical every month like any normal commercial mortgage), then get the splits to calculate and enter in both the mortgage and my deposit account?

    Thanks!

    Karl

  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    edited August 2023
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    I believe there is an important step in the Add Account process that needs to be inserted between steps 2 & 3 in the process you posted:

    If you instead select "Yes" (which is the default) you will not get the option to covert to a lender loan and will instead be taken to a prompt to set up a regular loan/mortgage account that will be linked to the Asset Account to fund that asset. This then will treat the loan/mortgage account as a Liability/Debt in Quicken which you do not want for this situation because it will treat payments planned and received as debits instead of credits in the checking account and it will mess up the Net Worth calculations.

    Selecting "No" will instead create just the Asset Account with no mortgage (debt account) linked to it. Then the ""Convert to a lending loan" option will be available in that Asset Account upper right Gear icon menu. During the conversion process the Asset Account will become a lender loan/mortgage and you will be walked through the process of entering the terms and conditions and the set up of the Reminder.

    Quicken Classic Premier (US) Subscription: R55.26 on Windows 11

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited August 2023
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    How do I PROPERLY in the Land of Quicken open the appropriate account so that her mortgage is in as an asset, and I enter the total payment (identical every month like any normal commercial mortgage), then get the splits to calculate and enter in both the mortgage and my deposit account?

    I think you should follow the 8 steps in the instructions I set out earlier. You enter the total payment in your checking account or wherever you deposited it, using the monthly Reminder that Quicken sets up for you. Accepting the Reminder will put a split transaction in your checking account, including a transfer of the principal amount to the loan account and the interest with a Category of Interest Inc.

    You should experiment in a test file in Quicken so you don't mess up your working file. As far as I know, like a normal mortgage, the future split between principal and interest does not depend on the exact date the payment was received or deposited. It does not compute late fees.

    If you receive an extra principal payment, You should add that on line 3 of the split transaction in the Reminder before entering the Reminder. This is an additional transfer to the asset account. Quicken will recalculate the amortization schedule to reflect the additional payment.

    Please experiment and tell us what you find.

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