I'm refinancing my mortgage, going with a new lender
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trudi.cooper44
Member ✭✭
Sorry if this is under the wrong category, I couldn't find an appropriate one. So I'm refinancing my mortgage, and the new loan amount will pay off a home equity loan in addition to the original mortgage. I am able to set up the new mortgage account, but I don't know what entries to make to zero out the original mortgage and the home equity loan. The closing is tomorrow (7/12), the first payment won't be due until September, I'm guessing. Any suggestions would be appreciated! Thanks in advance.
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Answers
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There are many valid ways to handle this scenario. For example, you may create a split transaction that receives a transfer of the entire new loan balance and distributes the funds appropriately to payoff the remaining interest, principal, closing costs, etc..0
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use the closing statement as your guide to reconcile the cash movement.
Each entry on the closing statement technically requires an entry in Quicken.
Start by setting up a liability account for the new mortgage; then post an entry to match the amount of the new mortgage and two additional entries to zero out the two mortgages; the remaining entries to net to the cash is what is on the closing statement.
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Thanks for your suggestions, very helpful. I'm somewhat embarrassed that I'm having trouble seeing the necessary transactions in my mind. In a test version of Quicken, I set up the liability account, called "New Mortgage". Is it in this account that I record the new mortgage money received (e.g., $150K from ABC Mortgage Company), then disbursals to the "Old Mortgage" (e.g., $107K) and home equity loan ($30K), $1600 as cash back to us (remaining escrow, our application fee, + differences in interest) and the remainder as closing costs? After mulling this over for a few days, this scenario is what I came up with. Does this seem valid? Thanks again for your suggestions.0
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yes, that makes sense.....on the 'cash back to us'.....some users would probably tease that out into more entries, but it doesn't have to be so.... you idea will work perfectly,0
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The "New Mortgage" liability (aka loan) account should not receive the funds from the "ABC Mortgage Company". The opening transaction in the "New Mortgage" account is a withdrawal of funds establishing the principal amount owed. This usually appears as an "Opening Balance" self-referencing transfer transaction. You may change the "Opening Balance" payee to "ABC Mortgage Company" if that helps.trudi.cooper44 said:Thanks for your suggestions, very helpful. I'm somewhat embarrassed that I'm having trouble seeing the necessary transactions in my mind. In a test version of Quicken, I set up the liability account, called "New Mortgage". Is it in this account that I record the new mortgage money received (e.g., $150K from ABC Mortgage Company), then disbursals to the "Old Mortgage" (e.g., $107K) and home equity loan ($30K), $1600 as cash back to us (remaining escrow, our application fee, + differences in interest) and the remainder as closing costs? After mulling this over for a few days, this scenario is what I came up with. Does this seem valid? Thanks again for your suggestions.
What I was suggesting is to change this self-referencing transfer to a transfer to your payment account. In the payment account, the transaction would be changed to a split transaction with the additional entries to distribute the proceeds appropriately. This approach keeps the "spending" in a spending account.0 -
AHA! Since I plan on depositing the $1600 cash we are getting back into my checking account, it makes sense to record the receipt of the $150K mortgage money and various disbursements into my checking account. I appreciate you both taking the time to help me out. Many thanks.0
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