Mortgage Payments (Principal, Interest, & Escrow) Recommendations Setup

Dick_Davis · July 26

As with any person, I have a mortgage payment. I have set up the account, Regions Mortgage, and have it with three subaccounts – principal (the loan), interest, and escrow. But the question is “is this the best setup”? I can see that there is another possible way of setting up the account as Regions Principal under itself of Loans, the interest under Loan Interest and Regions Escrow. With this arrangement, the principal and escrow would be in one main account and then the interest paid will be under loans. Also, since the Regions account is self updating, the setup could be for Loans – Principal, Loans Interest and Loans Escrow. Another part of the question is with the Escrow as this is like a savings account and then twice yearly has with drawls for insurance and property taxes.

From those that have set up their mortgage, which is the best and the easiest to administer within Simplifi.

SRC54 · July 26

I can see having a liability account for the loan and an asset account for the escrow account from which you draw for taxes and insurance. But mortgage interest is an expense and should be one of your categories.

The easier way each month is to record a payment transaction for your mortgage payment that is a transfer from your checking account (usually) to your mortgage account. Then you would have another transaction each month for mortgage interest. The payee both for the transaction and the interest would be Regions Mortgage.

If part of your payment each month goes into the escrow account, then I would split the payment transfer you make between Mortgage and Escrow.

So it would look something like this:

Checking - $1000.
Split: Regions Mortgage +$900
Split: Escrow Account + $100

Interest Charge:

Regions Mortgage - $150
Category Mortgage Interest + $150

These numbers are absurd but for illustrative purposes.

So your Regions Mortgage Account balance would decrease $750; Escrow would increase $100 and your interest expense cover the other $150.

DryHeat · July 26

@SRC54

I agree with your method (with the slight change I suggest below), but I'm not sure exactly what @Dick_Davis's situation is. He mentions having "subaccounts" under his Regions Mortgage account, and I don't know what he means by that.

I would probably do all this in one transaction. The result in the Accounts and Categories is the same.

FROM:

Checking [Account] - $1000

TO:

Split: Regions Mortgage [Account] +$750
Split: Escrow Account [Account] + $100
Split: Mortgage Interest [Category]+150

(When I had a mortgage I just used a static approximate number for Mortgage Interest and then cleaned it up every few months when I had enough statements to make it worthwhile.)

SRC54 · July 26

@DryHeat I would probably do the same (one transaction). I thought it might be easier for @Dick_Davis to record it as two transactions. It could even be 3 depending on how and when his bank handles the transfer to escrow. It might not be done monthly.

I too didn't quite understand the sub account nor how to handle that in Simplifi. It would probably have to be a separate account.

Dick_Davis · July 26

@Dryheat @SRC54 Thank you both for the information provided and it makes totally logical sense and easy to use. But ideally, this could also be handled from a split for the Principal, Interest and Escrow and is requested to be tested. This way is unfortunately, making the user fit the app not the app fitting the user.

Dick_Davis · July 26

Also, if the user is attaching the statement, there needs to be three separate attachments for the three separate transactions.

SRC54 · July 26

@Dick_Davis Well, ultimately, you do have to make the app fit your needs. If your mortgage account is connected, it may download the transactions. Then you only need to clean them up, do splits as necessary, categorize as necessary. But if it isn't connected, then you have to do it. It is up to you whether to split transactions or make separate transactions. It's your data.

Good luck.

DryHeat · July 26

@Dick_Davis

"But ideally, this could also be handled from a split for the Principal, Interest and Escrow and is requested to be tested."

Unless I am misunderstanding, that is what I suggested you do in my earlier post this morning.

Splitting a single checking withdrawal across two transfers and one expense works fine in Simplifi.

Is there some reason why you can't do it that way?

What is it exactly that is "requested to be tested"?

Dick_Davis · July 26

@DryHeat @SRC54 What is mean by sub accounts is for example Loans, Loans:Freedom, Loans:Freedom:principal, Loans:Freedom:Interest. This is just the lower-level account at a 2nd or 3rd level. Hope this helps with the understanding. In Simplifi, I might not be using the correct word.

DryHeat · July 27

@Dick_Davis "What is mean by sub accounts is… In Simplifi, I might not be using the correct word."

I sounds like you are talking about what both Simplifi and Quicken Classic call Categories.

But I'm not completely sure because you said that "the Regions account is self updating," which is not something that Categories do. (Only Accounts link to financial institutions and update themselves.)

BTW, could you respond to my previous post about splitting the transaction? I want to make sure we are on the same page about that — or else understand why we are not and what it is exactly that you want to be tested.

Dick_Davis · July 27

@DryHeat @src54 I have tried both ways and make a selection at this time. I will work with this selection and see how it works.

Mortgage Payments (Principal, Interest, & Escrow) Recommendations Setup

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