Line of credit loan - mortgage

Pablo Francesca rshgeneral at yahoo.com
Fri May 21 03:06:33 EDT 2010


I think what you are saying is that you are unsure of how to represent the fact that while you owe the money for the loan, you never receive the funds.

Try this: (this assumes that you're not factoring your home value into your accounting.  I can't figure the accounting behind that out yet).  Go ahead and credit (increase) your loan account and then debit (increase) an expense account.  The loan account transactions will note the origins of the funds and the expense account transactions will indicate their current disposition.  Also, by doing it this way, it will reflect that you never actually had the money.  When you pay the loan, just deduct the amount from your bank account (credit) and reduce the loan account by the same amount (debit).


--- On Thu, 5/20/10, dude man <carnmightyhawks at hotmail.com> wrote:

From: dude man <carnmightyhawks at hotmail.com>
Subject: RE: Line of credit loan - mortgage
To: john.layman at laymanandlayman.com, jwilsondmartin at gmail.com
Cc: gnucash-user at gnucash.org
Date: Thursday, May 20, 2010, 11:21 PM


Thats different to how I thought of doing it.

I think I'll setup a loan under liabilites for the amount the bank has sent to the builder.

My question is though how do I represent where that money comes from?

 

 

 

I won't worry about including the house as an asset at the moment
 
> From: john.layman at laymanandlayman.com
> To: jwilsondmartin at gmail.com; carnmightyhawks at hotmail.com
> CC: gnucash-user at gnucash.org
> Subject: RE: Line of credit loan - mortgage
> Date: Tue, 18 May 2010 11:11:44 -0400
> 
> I have our home equity line of credit as a sub-account under
> Liabilities/Loans/Other Loans. The actual equity asset, however, is found
> under Assets/Fixed Assets/House. I make no effort to represent the
> potential market value of the house in the asset account. Instead,
> beginning with the original purchase price, the expense of major renovations
> transfers into (debits) the asset account. My purpose, beyond approximating
> what the house means to our net worth, is to have a clear understanding of
> what we would have to realize from the sale of the house to break even. Of
> course, any mortgage liability (including the equity line of credit) serves
> as an offset against the asset in our overall financial picture.
> 
> -----Original Message-----
> From: gnucash-user-bounces at gnucash.org
> [mailto:gnucash-user-bounces at gnucash.org] On Behalf Of John Wilson & Diane
> Martin
> Sent: Tuesday, May 18, 2010 9:19 AM
> To: dude man
> Cc: gnucash-user at gnucash.org
> Subject: Re: Line of credit loan - mortgage
> 
> I'm not an accountant but when I recently activated a line of credit I
> treated it as a Liability as it has to be paid off like a credit card
> account.
> I would be interested in other peoples approaches to this problem.
> HTH
> John
> On Tue, 2010-05-18 at 21:29 +1000, dude man wrote:
> > Hi, Can someone tell me how to set up a from the beginning a structure
> for a mortgage that is a line of credit loan? To complicate matters further
> it's a construction loan so while I have been approved for the whole amount
> only part payments of lump sums are being made to the builder.
> > 
> > I don't know what to include in the Assets/Liabilities etc.
> > 
> > If someone could point me in the right direction I would appreciate it
> > 
> > 
> > 
> > Thanks
> > 
> > 
> > 
> > Chris
> > 
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