Reverse Mortage Credit Line

Shelly D

Suggestions Please…..I am waiting for the bank that funded my reverse mortgage which has provided me with a "Credit Line". I am asking them for directions as how to download transactions into my register.

Until that time, I assume I would/should create an account that starts off with a credit balance of $xxxx? Should the opening balance be entered as a "+" or "-"? In addition, I presume that I should designate the credit line as a HELOC? The confusing part is when I attempt to create the credit line, the program asks for opening balance, term, interest rate etc. There are fields that I think should be "$0" and when I enter the $0 amount, the set-up states that the amount must be greater than $0.

The purpose of the credit line is to be able to subtract any withdrawals taken from this line. Furthermore, should this line be set up as a loan, debit or asset? When I attempted to fund the "account" with the opening balance of $xxxx, and attempt to "transfer (withdraw)" a specific amount as a "deposit" to a specific banking account, it identifies the amount of the transfer to my checking account as a subtraction rather than a deposit. I am confused and would appreciate any help…thanks.

Tom Young

I assume that you will be using the Reverse Mortgage Credit Line strictly as a source of cash, period. I can't think of any reason for repayments (paydowns) or interest expense entries. In this situation, if that's correct, YOU entirely control what happens with the loan; from time to time you pull more cash into your bank Account.

I'd set this up as an offline, manual, generic Liability Account. There's no reason I can think of for trying to download information into the Account. There's no register that you have access to when you set up a downloading loan and (if I'm correct in my assumptions) there's no other aspect of the credit line that needs recording other than the draws that you initiate.

When you make a draw you'd make a manual entry of:

Debit (Increase) Checking Account $XXX
Credit (increase) Rev Mtg LOC Account $XXX

A subsequent download from the bank handling your checking Account would find this entry and declare it a "Match."

If you rely entirely on downloads to put transactions into your checking Account (a less than ideal practice, in my opinion) then when the draw shows up in your checking Account you simply edit that transaction to make it a Transfer to the loan Account. If the "Payee" name associated with the draw is unique Quicken can be taught to "know" that this is a draw and put the correct transfer to the correct liability Account in the Category field automatically.

IF you've already made draws on the credit line then when you establish the Liability Account give Quicken an Opening Balance of $0 and a date one day before the first draw. Then go back into your Quicken checking Account and fix those draws to make them Transfers to the LOC Liability Account.

If my assumptions about how all this will work are incorrect then set me straight and I'll respond.