Recording home purchase

[Montara]

Hi Eric,

You wrote:
Here's some numbers for the sake of argument: Let's say I bought a house
at $100,000.  I put $1000 down on it to secure my contract.  Two weeks
later, I write a cheque from certified funds for $10,000, of which
$7,000 goes to the house (the rest go to loan fees, appraisers, and god
knows what else).  I also take out two mortgages, for $80,000 and
$13,000 respectively, to pay for the rest of the house.


Kate here:
There are various ways of doing this. Here is one way. But, pay attention to 
the 1000 Dollars you paid down to secure the contract. Was that refunded to 
you ? If not - it increased the price of the house...
Adjust your transactions to include or exclude this in the purchase price.



93,000 Mortgages
  7,000 to the house     
----------------------------------         
100,000 total
    1,000 Earnest Money 
-------------------------------------
101,000 Purchase Price -unless earnest money was returned 
    3,000 Purchase Cost
---------------------------------------
104,000---------------------total Purchase cost of the house

OK.
You need Fixed Asset Account "NEW HOUSE"
"Expense - Home Purchase Cost"
"Cash/Checking"
"Certified Funds"  (I don't know if this comes from savings or checking or 
whatever)
"Mortgage A" and "Mortgage B"
and eventually "Interest A" and "Interest B"

1. Transaction.
You decrease cash or checking account by $ 1,000.00 /offset it with the 
Fixed Asset NEW HOUSE

2. Transaction:
You decrease 'certified funds'  by $ 10,000.--
offset it with $ 7,000 Fixed Asset New House and $ 3,000 Home Purchase Cost
(or if you want to keep it simple, put the whole 10,000 against New House and 
make a notation referencing $ 3,000 as Expense.

3. Transaction 
Increase "Mortgage A" by $ 80,000.-- offset with Fixed Asset "New House"
Increase "Mortgage B" by $ 13,000.--/offset with Fixed Asset "New House"

The whole thing should balance at $ 104,000.--
either 101,000 House alone and 3,000 Home Purchase Cost
or 104,000 House - including Purchase Cost. 

If you want to keep track of your future house payments, make sure you have a 
copy of the amortization schedule and then create the interest accounts to go 
with each Mortgage account. Then you can split your monthly payments as per 
schedule. You might even need other expense accounts then for prop. taxes, 
insurance, etc.

Kate