[GNC] Dealing with escrow account

[Michael or Penny Novack]

On 11/2/2023 12:33 AM, Jediator wrote:
> In addition to setting up the proper account structure, I would make 
> your mortgage company as a vendor and set up a bill each month with 
> split transactions to map to mortgage-related subaccounts (e.g, 
> property tax, insurance, interest and principal) as such:
>
>  * Mortgage Payment
>      o PMI
>          + Tax (expense)
>          + Home Insurance (expense)
>          + Managment Fees (expense)
>          + Escrow (remaining asset, balance may go negative)
>      o Loan Payment
>          + Principals (asset or loan)
>          + Interests (expense/deductible)
>
> The advantage is that you have a vendor report to track all mortgage 
> payment and each bill payment will automatically split the 
> transactions.  You may set up a limit in tax and insurance account 
> each year so that when the payment reaches the max, it goes to the 
> escrow account (remaining balance), and reconcile these accounts at 
> manually at tax time.  Hope this helps.

Except might be more suited to business mortgages (say in the rental 
property business)

a) The amounts principal vs interest going to be changing each payment 
(if here in the US with amortizing mortgages). How to automate that not 
easy especially as the lender may have calculated the amortization table 
differently (chance you and they used same method very small) .

b) The private homeowner much more likely to be on the cash basis. 
Things like the amounts for RE tax, property insurance, etc. periodic. 
Thus likely RE tax quarterly, property insurance annually, management 
fees only if a condo, etc. Remember that gnucash only supports invoicing 
for accrual basis. MOST private individuals would be keeping books on 
the cash basis.


Michael D Novack