Existing mortgage question

Beth Leonard beth at oasis.slimy.com
Wed Oct 10 23:48:14 EDT 2007


On Wed, Oct 10, 2007 at 04:32:48PM -0700, Bill Michal wrote:
> Using the docs, tutorials and mailing list archives, I went through the
> Mortgage Druid and it seems to be ok, but there weren't any values in Assets
> or Liabilities when it finished.  So I let it sit while I worked today it
> seems like these are three separate items.  Are the following assumptions
> correct or close?
> 
> 1)  The druid only sets up scheduled transactions

I can't answer that part as I don't use the druid.

> 2)  I still need to add a liability transaction equaling the balance when I
> want to start

Yes.  If you had the mortgage (a liability) before you started using 
GnuCash, then you will make a transaction between your liability->home
loan account and Equity->opening balances.

> 3)  The fixed asset amount for my house may be the same as my liability
> balance

It may be, but it may not be.  If you bought your home for $100K with
$20K down and an $80K loan, then the liability is $80K, but the fixed
asset amount is $100K.  If your house has appreciated since then, you
may wish to enter unrealized gains, but you don't have to.   To get
the $100K in the asset account, $80K comes from the liability and
$20K comes from your bank account.  (for new houses, if you bought
it in the past, the whole $100K comes from Equity->opening balances)

> 4)  The fixed asset amount may be set to what I think I could sell the house
> for

Yes it may.  It all depends on what numbers you want to look at
on your books.  Think about why you care about the value, and go
from there.  (i.e. for tax purposes, or for stating assets for
college financial aid applications or for calculating your own
personal ROI or ...)  You may be interested in reading up how
to enter unrealized gains/losses here:
http://www.gnucash.org/docs/v2.0/C/gnucash-guide/capgain_example1.html

> 5)  I still need to add a fixed asset transaction

Yes.
 
> However, I'm not sure what the outcome would be if I set the fixed asset
> amount higher than the liability.

The outcome is that your Equity->Opening Balances account will
have a non-zero total for items related to your house.  Which,
if you think about it makes sense.  If you borrowed less to
buy your house than your house is worth, it means you have some
equity in your home.  Which is exactly what will show up on your
balance sheet.

--Beth
Beth Leonard
http://www.LeonardFamilyVideos.com


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