Re-amortize an energy loan
I've recently applied a tax credit refund to my solar energy loan (home equity). The loan has been re-amortized according to the loan agreement, which lowers my monthly payment by about 1/3. How do I adjust the principal and interest payments on this loan in Quicken to reflect the new payment amount? The "Edit Loan and Payment Terms" doesn't allow this.
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Is this considered to be a new loan? Or a change in terms of the original loan?
If a new loan, which it kinda sounds like, just create the new loan and use the proceeds of closing out the original to fund this loan.
If a change in terms … what changed? Principal? Rate? Term?
Q user since February, 1990. DOS Version 4
Now running Quicken Windows Subscription, Business & Personal
Retired "Certified Information Systems Auditor" & Bank Audit VP0 -
Thanks. The energy loan agreement allows for a one-time re-amortization of the existing loan so that (presumably) the federal tax credit can be applied, lowering the principal balance by roughly 1/3. This creates a new, reduced monthly payment. I guess it might be easier to just transfer to a new loan since Q doesn't allow me to edit the terms of the existing loan.
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What happens when you click the EDIT Terms button on the loan's main page?
And when you do, why can't you change the Current Balance? I'd post some sort of Decrease amount to the loan register first … to eflect the amount forgiven. I think that this dialog only changes the payment … not the actual loan account, which is why you'd need that Decrease txn.
Naturally, take a backup before trying any of this … just in case.
Q user since February, 1990. DOS Version 4
Now running Quicken Windows Subscription, Business & Personal
Retired "Certified Information Systems Auditor" & Bank Audit VP0 -
The Loan Details window allows me to adjust the Original Balance but the Loan Payment section will not permit changing the Principal payment amount. The principal balance on the loan was reduced by a transfer from my checking account, so the current balance shown is correct.
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I'm trying to get a mental picture of the totality of the transactions.
Is what happened here more or less along these lines?
- You took out a loan to fund the installation of solar panels.
- Then the IRS sent you a refund for a tax credit
- You sent the refund to the lender, reducing the loan balance
- The lender allowed for a new amortization schedule based on the reduced balance, and maybe a changed remaining term, or something?
If that's essentially correct then it does seem that the creation of a "new" loan in Quicken is the right way of going here. The old loan goes away (zeros out) and a new loan and the reduced balance and with different amortization takes it's place.
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Yes, that's it exactly. The term doesn't change but the amortization schedule does. I will set it up as a new loan and transfer the balance. Thanks.
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I don't know how QMac works but in Windows when you set up a new loan the Quicken loan wizard asks for the opening balance. In your case that's the new reduced loan amount. Then the loan wizard gets the rest of the load information and sets up the new loan Account with the opening balance you specified. While it's fine to then transfer the loan balance in the old Account to the new Account you end up with net opening balance that's 2 times the correct amount. At that point you simply delete Quicken's Opening Balance entry and everything's fine.
An alternative to transferring the old balance and then deleting Quicken's opening balance entry (again, in Windows) is to make a self-referential entry in the old Account reducing the balance in that Account to $0 without affecting anything else in your file.
You may have to deal with a similar situation in the Mac product.
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