Help needed... How does one handle Mortgage payments made to me as the holder of a mortgage?

I have a well diversified bunch of assets. One is a mortgage. Every month I get a payment which is part principle and part interest... and there is no easy way to enter this that I can see. Quicken does not seem to provide for the owner of mortgages the way it does for the owner of stocks, bonds or mutual funds.

Any suggestions on an easy way to handle the repayment of princple and the recording of the interest? The mortgage is one account, and the payment goes into another [bank] account.

There needs to be a reduction in the value of the mortgage monthly, but that cannot be a transfer since the money is already in the bank account, together with the interest when the payment is deposited each month.

Reply to
RsH
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Mortgages with you as lendor are handled the same, in Quicken, as mortgages with you as the borrower. If you've ever setup a loan in Quicken where you are the borrower, you are well on your way to being able to do it with you as the lender: if I recall, the only difference in the setup is the question about whether you are borrower or lender; Quicken takes care of the rest, including creating the correct account types.

Reply to
John Pollard

Hi, RsH.

John has told you how to do it in Quicken - and I'm glad because I haven't actually had occasion to learn how in Quicken.

The theory is pretty easy, though. You increase one asset - your [bank] account - by the full amount of the payment received and deposited. You record the amount of interest included in the payment received as income - Interest Income Category. And you decrease the other asset - the mortgage principal - by the difference.

In Accountant-speak: Debit Bank Account $1,000 Credit Interest Income $ 200 Credit Note Receivable 800

Or, in Quicken-speak (if you don't use any Wizard): Record it as a Split transaction in the bank account: Deposit $1,000 Interest Income Category $ 200 Note Receivable Asset 800

In the beginning, of course, you would have made an entry to record a check from your bank account, creating a new Asset Account called Note Receivable. Each monthly entry for receipt of a principal payment would reduce the balance in that Note Receivable account until, some day, the final payment would reduce it to zero. Yes, you are transferring that amount from the Note asset to the Bank asset.

And, just a couple of terminology nitpicks (I can't help it. I'm an accountant, remember. Retired, but you don't turn off a 30-year mindset that easily.): A principle is something you believe in; what you collect on the note is principal (and interest). And you receive payments on Note Receivable, not a mortgage receivable; the mortgage is security for payment of the note. Yes, you hold both the note the mortgage, but the note is the one that holds the promise to pay and bears interest. (OK. I feel better now. )

RC

Reply to
R. C. White

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