[GNC] mortgage refinance

[pyz01 at cox.net]

Parker -- for the case I was demonstrating, the old loan amount is not pertinent since you have been paying it down.  I keep track of the principal balance still remaining in the loan - so if the original loan was $100,000, the actual principal amount still due is less than that since you have been paying the loan down.   Notice - in Derek case he is also not taking into account the old loan amount, since, the old loan amount is not pertinent; but instead talking about the remaining principal balance -- which is very pertinent. 

So in my case - I have the exact principal amount due on my existing loan.  So keeping with Derek example, let's say, for your example, that amount is $95,000 remaining principal balance.

Old Mortgage loan account --- Increase transaction - (new loan) $105,000.  Since my mortgage account shows the $95,000 still remaining, this shows a temporary balance of $200,000 ( the amount of the new loan and the amount of the still remaining principal balance of the old loan).

Now I credit this same account (decrease transaction) the amount the bank paid off from the old loan (the remaining principal balance of $95,000).  The next result is the balance is now the total principal balance of the new loan $105,000. 

As I said, there are several way to do this and a lot depends on what accounts you have setup and how you have them setup.  For me, this is the easiest way to keep the same account, and just replace the old loan with the new loan.  The split transaction I have to do this includes various accounts and amounts for the expenses included in the closing statement -- but the net affect is the mortgage account changes from the old outstanding principal balance to the new one.  And as I make payments in the future, the principal balance is decreased by the principal portion of my payment and the interest goes to an interest expense account to keep track of my deductible interest (in a separate account). 


This is the long answer to essentially say I just replace the old principal balance for the new principal balance. 

  

-----Original Message-----
From: Derek Atkins <derek at ihtfp.com> 
Sent: Sunday, March 21, 2021 7:08 AM
To: Parker Graham <plg57 at gmx.com>
Cc: pyz01 at cox.net; gnucash-user at gnucash.org
Subject: Re: [GNC] mortgage refinance

Let's say your old loan has $95,000 remaining.
Your new loan is $105,000
I am ignoring loan costs, interest prepays, escrow, etc.

You would create a transaction:

  Loan Payout       Old Loan       Debit   $95000
                    New Loan       Credit $105000
                    Cash           Debit   $10000

I.e., you will Increase cash $10k, and then pay off the old loan and take out the new loan.

-derek

On Sun, March 21, 2021 9:41 am, Parker Graham wrote:
> not following, please give me example such as original loan is
> 100,000.00 refi loan is 105,000.00
>
> thanks
>
> On 3/21/21 9:36 AM, pyz01 at cox.net wrote:
>> Several ways to do this.   Here is the easiest way I know:
>>
>> Mortgage Loan (start loan B)           Increase - Loan Amount
>> Mortgage Loan (start loan B)            Decrease -Principal Amount
>> remaining
>> from Loan A
>>
>> Net result - New loan amount before first payment.  Now the two 
>> entries are actually the net result of a split transaction entry that 
>> comes right from the closing statement received from the mortgage 
>> company.  If you follow that statement - you should be good to go.
>>
>> Hope that helps.
>>
>>
>> -----Original Message-----
>> From: gnucash-user <gnucash-user-bounces+pyz01=cox.net at gnucash.org> 
>> On Behalf Of Parker Graham
>> Sent: Sunday, March 21, 2021 6:25 AM
>> To: gnucash-user at gnucash.org
>> Subject: [GNC] mortgage refinance
>>
>> Have mortgage set up in system but refinanced it and need help on how 
>> to payoff existing loan and set up new loan
>>
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-- 
       Derek Atkins                 617-623-3745
       derek at ihtfp.com             www.ihtfp.com
       Computer and Internet Security Consultant