Loans, Mortgage documentation

[Dave Reed]

On Friday 25 July 2003 17:31, Jon Lapham wrote:
> I took a first stab at the loan documentation.  Basically, just the 
> intro, account setup and the house mortgage.
> 
> http://www.jandr.org/temp/gnucashdocs/chapter9.html
> 
> The part I'm most interested in comments about is the mortgage part, 
> since I have no idea if it is setup correctly.  (are there other fees 
> besides closing costs?  How are closing costs calculated?)
> 
> http://www.jandr.org/temp/gnucashdocs/loans_mortgage1.html
> 
> Later, Jon
> 
> -- 
> -**-*-*---*-*---*-*---*-----*-*-----*---*-*---*-----*-----*-*-----*---
>   Jon Lapham  <lapham at extracta.com.br>          Rio de Janeiro, Brasil
>   Work: Extracta Moléculas Naturais SA     http://www.extracta.com.br/
>   Web: http://www.jandr.org/
> ***-*--*----*-------*------------*--------------------*---------------


I'm not certain what you mean by "how are closing costs calculated?".
In the US, you receive a HUD-1 form that breaks down the various
closing costs (such as appraisal fee, credit report, title insurance,
etc.). For a personal residence, you really don't need to worry about
the breakdown so your example is fine. The only change I would make is
I would just have one line that lists Liabilities: Mortgage $103,000
instead of one line of $100,000 and one line of $3,000.

For investment real estate, you do need to break the closing costs
down. Some of them can be expensed immediately and others need to be
depreciated over the life of the loan.

Note: I am not a professional accountant, it's just a hobby for me.

Dave