Re: [GNC] Dealing with escrow account
On 2023-11-02 12:04, Michael or Penny Novack wrote: > You are unlikely to receive an amortization table for free (I would have > had to pay a bit extra for it and that was four? decades ago. Truth-in-Lending legislation has changed A LOT in those four decades. At closing for my house, three years ago, I received an amortization table whether I wanted it or not. Even without an amortization, table, I think it is not so hard to figure amortization as you imply. I suspect (but don't know for sure) that the need to match standard, legally mandated methods of computing the Annual Percentage Rate (APR) of a loan have caused banks to adopt more uniform methods of amortization. And if nothing else, the homeowner can always look at the monthly statement from the mortgage company. It shows principal (not "principle"), interest, and escrow component of the next payment due. BTW, GnuCash's loan wizard matched my amortization table perfectly. If there were really so many amortization methods out there, that would have been quite a remarkable coincidence. Stan Brown Tehachapi, CA, USA https://BrownMath.com ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
On 11/2/2023 12:49 PM, Alan Johnson via gnucash-user wrote: Your mortgage payment should be fixed, adjusting one a year for escrow review. You can automate / enter a year's worth of payments from bank to mortgage account. You should also have a the 360 (or other) payment amortization table as part of your loan packet which shows you what each payment will be for Principal and Interest. Unless you are paying extra, you can just follow that to pre-enter your transactions. a) You are unlikely to receive an amortization table for free (I would have had to pay a bit extra for it and that was four? decades ago. Since software was how I made my living, I wrote my own program. Note that this is NOT as trivial as some here think when the problem is to match one done by somebody else. You don't know which of the methods they used, where they were rounding, or what the final payment would be (it's NOT going to come out exact). My program began with a standard "present value" method, then began some trail and error adjustments till matched to the penny what the lender had for the payment amount and minimized how different was the final payment. b) If you DO have an amortization table, ideally you make extra payments in the amount of the next principle payment (or sum of the principle payments of the next several payments) and then you just cross off those payments. In other words, you next principle/interest division will be that of the next uncrossed off payment. In effect, you are "buying" time off the end of the loan (mortgage ends sooner). This can be very cost effective in the early years of the mortgage when interest is a significant percentage of the payment. Michael D Novack ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
Your mortgage payment should be fixed, adjusting one a year for escrow review. You can automate / enter a year's worth of payments from bank to mortgage account. You should also have a the 360 (or other) payment amortization table as part of your loan packet which shows you what each payment will be for Principal and Interest. Unless you are paying extra, you can just follow that to pre-enter your transactions. Alternatively, you can enter 12 mos of payments from bank, enter 12 mos of escrow (which should be fixed unless it adjusts) and approximate the interest and then reconcile with your statement. Interest will likely decline a few dollars each payment. When you get your bills for taxes and insurance, if they are escrowed, then you can enter/pay them out of the escrow asset account. On Thu, 2023-11-02 at 12:41 -0400, Jediator wrote: > One way to automate the bill generation would be to create a payment > plan in a spreadsheet. It should be fairly easy to calculate > principal > and interest in each installment in a spreadsheet, and convert that > spreadsheet in to csv format for bill generation in GC, and import > the > csv file to GC to populate the bills. You may have to create two > CSVs, > one with PMI and the other without PMI (i.e., when your principal > reaches 10% of your loan as in the US). > > On 11/2/23 9:00 AM, Michael or Penny Novack wrote: > > a) The amounts principal vs interest going to be changing each > > payment > > (if here in the US with amortizing mortgages). How to automate that > > not easy especially as the lender may have calculated the > > amortization > > table differently (chance you and they used same method very small) > > . > > ___ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > - > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. smime.p7s Description: S/MIME cryptographic signature ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
One way to automate the bill generation would be to create a payment plan in a spreadsheet. It should be fairly easy to calculate principal and interest in each installment in a spreadsheet, and convert that spreadsheet in to csv format for bill generation in GC, and import the csv file to GC to populate the bills. You may have to create two CSVs, one with PMI and the other without PMI (i.e., when your principal reaches 10% of your loan as in the US). On 11/2/23 9:00 AM, Michael or Penny Novack wrote: a) The amounts principal vs interest going to be changing each payment (if here in the US with amortizing mortgages). How to automate that not easy especially as the lender may have calculated the amortization table differently (chance you and they used same method very small) . ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
On 11/2/2023 12:33 AM, Jediator wrote: In addition to setting up the proper account structure, I would make your mortgage company as a vendor and set up a bill each month with split transactions to map to mortgage-related subaccounts (e.g, property tax, insurance, interest and principal) as such: * Mortgage Payment o PMI + Tax (expense) + Home Insurance (expense) + Managment Fees (expense) + Escrow (remaining asset, balance may go negative) o Loan Payment + Principals (asset or loan) + Interests (expense/deductible) The advantage is that you have a vendor report to track all mortgage payment and each bill payment will automatically split the transactions. You may set up a limit in tax and insurance account each year so that when the payment reaches the max, it goes to the escrow account (remaining balance), and reconcile these accounts at manually at tax time. Hope this helps. Except might be more suited to business mortgages (say in the rental property business) a) The amounts principal vs interest going to be changing each payment (if here in the US with amortizing mortgages). How to automate that not easy especially as the lender may have calculated the amortization table differently (chance you and they used same method very small) . b) The private homeowner much more likely to be on the cash basis. Things like the amounts for RE tax, property insurance, etc. periodic. Thus likely RE tax quarterly, property insurance annually, management fees only if a condo, etc. Remember that gnucash only supports invoicing for accrual basis. MOST private individuals would be keeping books on the cash basis. Michael D Novack ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
In addition to setting up the proper account structure, I would make your mortgage company as a vendor and set up a bill each month with split transactions to map to mortgage-related subaccounts (e.g, property tax, insurance, interest and principal) as such: * Mortgage Payment o PMI + Tax (expense) + Home Insurance (expense) + Managment Fees (expense) + Escrow (remaining asset, balance may go negative) o Loan Payment + Principals (asset or loan) + Interests (expense/deductible) The advantage is that you have a vendor report to track all mortgage payment and each bill payment will automatically split the transactions. You may set up a limit in tax and insurance account each year so that when the payment reaches the max, it goes to the escrow account (remaining balance), and reconcile these accounts at manually at tax time. Hope this helps. -- JC On 11/1/23 1:22 PM, Alan Johnson via gnucash-user wrote: I structure my mortgage accounts like thus: - Asset account representing the property value (sub accounts for land / buildings as needed) - Loan/Liability account representing the amount borrowed which is transferred to the Property Asset account - Closing costs from the HUD-1 should also be accounted for as expenses, along with contributions from checking/cash for down payments - Asset account for escrow (initial transfer from purchase transaction / liability account to fund the account at closing) - Payment from checking goes to the mortgage liability account - I assess interest expense as an increase in the liability account - Transfer escrow payment to escrow account out of (increase) liability account Although not expressly listed, the balance applied to the loan balance is the principle payment that reduces the outstanding amount. The balance of the loan account should then be the pay off amount of the loan, adjusted for accrued interest since the last statement/entry. Escrow account pays out expenses (property taxes, hazard insurance, etc.) as expense line items. Tracking the escrow balance separately is also useful for tracking refunds due to you when you sell and/or pay off the loan. Alan On Wed, 2023-11-01 at 11:10 -0400, Michael or Penny Novack wrote: On 11/1/2023 12:03 AM, Edwin Booth wrote: Hi. How do y’all deal with a mortgage escrow account? Specifically, each month I pay into the escrow account along with my monthly PMI payment. It is all an expense. But when the mortgage company pays out money from that escrow account (for taxe and insurance payments) how do you account for them in GnuCash? Or do you just wait until tax time and record it on your return w/o even putting into GC? Thanks, Edwin "each month I pay into the escrow account along with my monthly PMI payment. It is all an expense." No it is not. In order to learn bookkeeping you need to unlearn the mental habit "if money leaves my pocket, an expense and if money not leaving my pocket, not an expense." When you make a mortgage payment it is a SPLIT transaction. What you pay (a credit against your bank account) and debits to THREE accounts. Only one of these, mortgage interest would be an expense account. The escrow account is an ASSET, your money being safely set aside in order to pay expenses when they come due. Expenses like real estate tax, water and sewer bills, property insurance bills, etc. It is quite possible that the lender will send you a statement for that account just once a year. You might want to be using the previous statement to enter ESTIMATED transactions on estimated dates and then reconcile (manually) when your next statement gives actuals. Michael D Novack ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
On 11/1/2023 5:05 PM, Anthony Della Cioppa wrote: I set up two saving account, one taxes, one for insurance and my one for my Lian. When that gets paid I pull it from the corresponding savings account. Would that be wrong? You can THINK of like a "savings account", an involuntary savings account, similar to one you might have set up to deduct X form your paycheck and have it automatically deposited in that savings account. BUT -- why not learn to think of it more properly. Bank accounts aren't the only sort of assets under "current assets" (liquid, and available to you). However in this case, an escrow account isn't "liquid". You can't take money of it until the mortgage is ended (you would then get back any balance remaining). However you perhaps have other asset accounts of this type. For example, you may have potential taxes withheld. If so, why not create under assets "escrow accounts" and there you could put the mortgage escrow account, federal tax withholding, state income tax withholding, etc. Notice they are similar in that you can't get money back (any remaining balance) until after your taxes have been filed. So in the same sense, an "escrow" account. Michael D Novack PS -- BTW, these are not really gnucash questions. Not how do I do using gnucash to keep the books but how do I do it no matter how I am keeping standard double entry books. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
Your GnuCash mortgage related accounts should be given the same account type as the various accounts at your lender's location. Follow the recommendation of Michael or Penny Novack earlier in this thread. For the principal and interest payments review the examples in the help manual for suggestions. On Wed, Nov 1, 2023 at 4:06 PM Anthony Della Cioppa wrote: > I set up two saving account, one taxes, one for insurance and my one for > my Lian. When that gets paid I pull it from the corresponding savings > account. Would that be wrong? > ___ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > - > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. > -- David Carlson ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
I set up two saving account, one taxes, one for insurance and my one for my Lian. When that gets paid I pull it from the corresponding savings account. Would that be wrong? ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
I structure my mortgage accounts like thus: - Asset account representing the property value (sub accounts for land / buildings as needed) - Loan/Liability account representing the amount borrowed which is transferred to the Property Asset account - Closing costs from the HUD-1 should also be accounted for as expenses, along with contributions from checking/cash for down payments - Asset account for escrow (initial transfer from purchase transaction / liability account to fund the account at closing) - Payment from checking goes to the mortgage liability account - I assess interest expense as an increase in the liability account - Transfer escrow payment to escrow account out of (increase) liability account Although not expressly listed, the balance applied to the loan balance is the principle payment that reduces the outstanding amount. The balance of the loan account should then be the pay off amount of the loan, adjusted for accrued interest since the last statement/entry. Escrow account pays out expenses (property taxes, hazard insurance, etc.) as expense line items. Tracking the escrow balance separately is also useful for tracking refunds due to you when you sell and/or pay off the loan. Alan On Wed, 2023-11-01 at 11:10 -0400, Michael or Penny Novack wrote: > On 11/1/2023 12:03 AM, Edwin Booth wrote: > > Hi. How do y’all deal with a mortgage escrow account? Specifically, > > each > > month I pay into the escrow account along with my monthly PMI > > payment. It > > is all an expense. But when the mortgage company pays out money > > from that > > escrow account (for taxe and insurance payments) how do you account > > for > > them in GnuCash? Or do you just wait until tax time and record it > > on your > > return w/o even putting into GC? > > > > Thanks, Edwin > > > "each month I pay into the escrow account along with my monthly PMI > payment. It > is all an expense." > > No it is not. In order to learn bookkeeping you need to unlearn the > mental habit "if money leaves my pocket, an expense and if money > not leaving my pocket, not an expense." > > When you make a mortgage payment it is a SPLIT transaction. What you > pay (a credit against your bank account) and debits to THREE > accounts. Only one of these, mortgage interest would be an expense > account. The escrow account is an ASSET, your money being safely set > aside in order to pay expenses when they come due. Expenses like real > estate tax, water and sewer bills, property insurance bills, etc. It > is quite possible that the lender will send you a statement for that > account just once a year. You might want to be using the previous > statement to enter ESTIMATED transactions on estimated dates and then > reconcile (manually) when your next statement gives actuals. > > Michael D Novack > > ___ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > - > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. smime.p7s Description: S/MIME cryptographic signature ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
On 11/1/2023 12:03 AM, Edwin Booth wrote: Hi. How do y’all deal with a mortgage escrow account? Specifically, each month I pay into the escrow account along with my monthly PMI payment. It is all an expense. But when the mortgage company pays out money from that escrow account (for taxe and insurance payments) how do you account for them in GnuCash? Or do you just wait until tax time and record it on your return w/o even putting into GC? Thanks, Edwin "each month I pay into the escrow account along with my monthly PMI payment. It is all an expense." No it is not. In order to learn bookkeeping you need to unlearn the mental habit "if money leaves my pocket, an expense and if money not leaving my pocket, not an expense." When you make a mortgage payment it is a SPLIT transaction. What you pay (a credit against your bank account) and debits to THREE accounts. Only one of these, mortgage interest would be an expense account. The escrow account is an ASSET, your money being safely set aside in order to pay expenses when they come due. Expenses like real estate tax, water and sewer bills, property insurance bills, etc. It is quite possible that the lender will send you a statement for that account just once a year. You might want to be using the previous statement to enter ESTIMATED transactions on estimated dates and then reconcile (manually) when your next statement gives actuals. Michael D Novack ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
Got it. Thanks! Sent from Yahoo Mail for iPhone On Wednesday, November 1, 2023, 12:03 AM, Stephen M. Butler wrote: I treat it like another asset account. The monthly escrow amount goes in and when the escrow pays out it comes out as an expense. So your monthly payment out of your checking account ends up in three places: 1. Interest Expense. 2. Liability reduction (the mortgage). 3. Escrow asset account. Then when you get the statements you can reconcile/verify the Interest Expense (YTD), the Mortgage balance, and the escrow balance with any related transactions. On 10/31/23 21:03, Edwin Booth wrote: > Hi. How do y’all deal with a mortgage escrow account? Specifically, each > month I pay into the escrow account along with my monthly PMI payment. It > is all an expense. But when the mortgage company pays out money from that > escrow account (for taxe and insurance payments) how do you account for > them in GnuCash? Or do you just wait until tax time and record it on your > return w/o even putting into GC? > > Thanks, Edwin > ___ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > - > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Dealing with escrow account
I treat it like another asset account. The monthly escrow amount goes in and when the escrow pays out it comes out as an expense. So your monthly payment out of your checking account ends up in three places: 1. Interest Expense. 2. Liability reduction (the mortgage). 3. Escrow asset account. Then when you get the statements you can reconcile/verify the Interest Expense (YTD), the Mortgage balance, and the escrow balance with any related transactions. On 10/31/23 21:03, Edwin Booth wrote: Hi. How do y’all deal with a mortgage escrow account? Specifically, each month I pay into the escrow account along with my monthly PMI payment. It is all an expense. But when the mortgage company pays out money from that escrow account (for taxe and insurance payments) how do you account for them in GnuCash? Or do you just wait until tax time and record it on your return w/o even putting into GC? Thanks, Edwin ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
[GNC] Dealing with escrow account
Hi. How do y’all deal with a mortgage escrow account? Specifically, each month I pay into the escrow account along with my monthly PMI payment. It is all an expense. But when the mortgage company pays out money from that escrow account (for taxe and insurance payments) how do you account for them in GnuCash? Or do you just wait until tax time and record it on your return w/o even putting into GC? Thanks, Edwin ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
