mortgaging with gnucash

Mark Knecht markknecht at gmail.com
Thu Sep 23 18:53:40 EDT 2004


> 
> 1) When I take out this mortgage loan for the house, will I set up a
> liability account for the house, and an expense account for the
> purchase of the house as well, so that the first transaction concerning
> the house will be to move (say) $100,000 from the liability account to
> the expense account?  Or, will I actually just create the liability
> account with an opening balance of $100,000, which will decrease as I
> make monthly payments?
> 

My input (and I'm not a Gnucash user yet, so please modify any wording
to match with what your program really calls things) is to create an
actual Escrow account with an opening balance of $0 and then use that
account to manage the purchase of the house. In Quicken I've bought 3
houses and refinanced them about 6-8 times using this method. It's
great to be able to start the transaction and have a single account
that all money for the house moves through. There are all sort of fees
that you may not be used to, for documents, for shipping, title, agent
fees, inspections, etc. that all add up. I just end up duplicating the
escrow papers in this account and move money from my
checking/savings/investment accounts as required. When escrow is
finished the account has a $0 balance again and then (in Quicken) I
then hide the account so that I don't have to look at it, but I still
have all the data available should I need it. (And you will since it
has tax implications down the road if you paid points and sell before
the loan term expires, etc..)

Good luck with your house purchase. It's a great way to build your
financial base.

- Mark


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