[GNC] how to track home equity with mortgage loan Gnucash 4.2

[pyz01 at cox.net]

Nathan --  I think you might be overthinking it a little.  Here is a neat
trick that may help --  Here is what I did:

My Home - Property (Equity)  ---- main account  -- no entries
  Property value (subaccount)  --- only periodic entries when I want to
evaluate value of the property (adjust up or down)
  Mortgage Loan (subaccount)  -- entries are the mortgage split entries that
I split between account I pay from (increase) and the principle decrease
(this account) and the interest expense -decrease

At any point in time -- the "My home properties (Equity) account shows the
equity in the property.  The property sub account shows the values as of the
last time I updated the value.  And the mortgage loan shows the outstanding
principle balance on the loan. 

Easy -peasy -- and I'm letting Gnucash do the math for me! 

Hope that helps. 
 
Ken 

-----Original Message-----
From: gnucash-user <gnucash-user-bounces+pyz01=cox.net at gnucash.org> On
Behalf Of Nathan Falco
Sent: Sunday, October 11, 2020 1:34 PM
To: gnucash-user at gnucash.org
Subject: [GNC] how to track home equity with mortgage loan Gnucash 4.2

Hello,

I am a "knee deep" Gnucash user meaning I have a fair grasp of the basic
accounting principles and functions of the program. I successfully added my
house as a fixed asset, and added my mortgage as a liability. I have also
set up my mortgage payments as a scheduled transaction between my checking
account, liability account, and expense accounts.

It really bugs me that my home equity account only shows the appraisal value
of my home and the original loan principal balance. Every time I make a
mortgage payment I am reducing my liability and thus increasing my equity. I
cannot figure out how to track that. For argument sake let's use this
example:

Fixed Asset Opening Balance:
Fixed Asset: First home ($200,000 appraisal value)
Liability: 30 year mortgage ($150,000 principal balance)
Equity: Initial Home equity ($50,000 net value)

Monthly mortgage payment:
$1,000 debit: checking account
$600 credit: loan interest and escrow fees
$400 credit: mortgage loan principal balance

What I want to see happen when the first mortgage payment is recorded:
Fixed Asset: First home ($200,000 appraisal value) Current Asset: Checking
account debit ($400 toward loan principal)
Liability: 30 year mortgage decrease ($149,600 principal balance)
Equity: Initial Home equity increase ($50,400 net value)

If I credit the Home Equity account once per month, what account is missing
for me to debit?
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