[GNC] Mortgage & Loan Repayment schedule tool

[Dale Alspach]

I found the wizard confusing for setting up the escrow. I suggest using the
wizard to set the principal and interest payment approximately. Then either
edit the scheduled transaction created or add a separate scheduled
transaction to handle the escrow account.
The escrow is an asset. There should not be any expenses in the scheduled
transaction (at least as it is usually done in the USA). The expense occurs
when the bank pays the insurance company or the tax entity. The actual
amount is typically not known until a month or so before the payment is
made.
Dale.

On Sat, Jan 11, 2020, 3:55 PM Don Ireland <gnuCash at donireland.com> wrote:

> Thanks.  I really understood that --  there are lots of variables that can
> alter the interest versus principal portions of rhe payment (such as thr
> payment was processed at the bank on the 15th but you entered it into the
> system on the 20th.  You now have 5 extra days of interest).
>
> But that's not what I was asking about.  I'll say it again.  The recurring
> transactions created by the tool created transactions crediting the escrow
> account for the insurance & taxes and debiting the escrow account to
> transfer the money to the taxes and insurance accounts.  So now the total
> amount it takes from the account is equal to JUST THE P&I.
>
> I ended up fixing it by entering it manually.
>
> On January 11, 2020 2:26:08 PM CST, Michael or Penny Novack <
> stepbystepfarm at comcast.net> wrote:
> >Do not fault the tool if it does not agree with the bank. I have
> >written
> >these things. There are simply too many assumption about how to do the
> >calculation, where to round off, etc. << I ended up with a fancy
> >version
> >that allowed instructions where to adjust that could get agreement to a
> >
> >penny BUT it was not strictly speaking a "function" (a calculation) but
> >
> >a process using a repeated "trial and error" approach not unlike
> >Newton's Method --- lenders frequently charge for an "amortization
> >table" and I wanted to have that to be able to make additional payments
> >
> >of principle*.
> >
> >As for escrow amount calculation, this is really tricky. The bank will
> >set an amount to fund an amount that will not only be sufficient to pay
> >
> >the taxes and insurance bills over the year but will do so on a "cash
> >flow" basis. In other words, the fund will always have enough in it to
> >meet these bills when they are due. The bank will recalculate ever year
> >
> >but based on the dates of the expected bills will tend to fluctuate
> >more
> >wildly than you expect**. I never wrote one of these, but again, a good
> >
> >candidate for repeated "trial and error*"
> >
> >Michael D Novack
> >
> >
> >* If the amount you send in is the exact amount of the principle
> >portion
> >of the following payment then you can cross that payment off -- in
> >effect you are jumping closer to the end of the mortgage. Especially
> >when interest rates are high, as they were at the time, in early years
> >you can cheaply buy time off the end of the mortgage.
> >
> >**( In other words, given an initial balance (in escrow) and making a
> >series of payments at specified dates (the tax and insurance due dates
> >and amounts) what is the least monthly input (or biweekly if that's
> >what
> >the mortgage payments are) that will prevent the escrow amount from
> >going minus.)
> >
> >
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> Don Ireland
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