Recording A Mortgage In Quickbooks: A Step-By-Step Guide

Quickbooks is an accounting program that allows users to keep track of cash flow, issue and monitor invoices, manage payroll and take credit card payments online. It also allows users to stay on top of outstanding mortgages they owe. When recording a mortgage in Quickbooks, it is important to understand the correct procedures for recording real estate purchases as well as monthly mortgage payments. This involves recording payments to reflect both principal and interest components. When the payment is made in QuickBooks each month, the transaction needs to be split into three lines. The principal payment is applied to the Long-Term Liability Mortgage to pay down the loan, the interest payment is booked under an Interest Expense account, and the Escrow payment is applied to an Other Current Asset account.

Recording monthly mortgage payments

Firstly, set up a mortgage account in QuickBooks by creating a liability account for your mortgage. This will allow you to track the principal balance and payments over time. Enter the loan amount, interest rate, and payment frequency into QuickBooks. This information will automatically generate a schedule of future payments.

Next, use the payment schedule to map out the amount due each month. QuickBooks will calculate the interest and principal amounts based on the loan terms you entered. When you make your monthly mortgage payments, be sure to record them in QuickBooks under the appropriate liability account. This will ensure that your balance sheet stays up-to-date and accurate.

Finally, regularly review your balance sheet to ensure that all mortgage payments are correctly reflected and that your principal balance is decreasing over time. This will help you maintain accurate financial records and make informed decisions regarding your mortgage and overall financial health.

By following these steps, you can effectively record and manage your monthly mortgage payments in QuickBooks, streamlining your financial management and ensuring proper reporting for budgeting, loan applications, and tax compliance.

Tracking outstanding mortgages

To set up a mortgage in QuickBooks, you need to start by selecting "Chart of Accounts" from the "Lists" menu at the top of the screen and clicking "New". From the drop-down list, choose "Long Term Liability". This is because, initially, the home is purchased with a long-term loan from the bank. Next, you will need to set up accounts for your mortgage principal, interest, and escrow payments. The principal payment is applied to the Long-Term Liability Mortgage to pay down the loan, the interest payment is booked under an Interest Expense account, and the Escrow payment is applied to an Other Current Asset account.

After setting up these accounts, you can name the account and choose the "Track depreciation of this asset" checkbox. Enter the recent value of your asset in the "Original cost" section and the as-of-date. If you are recording a loan, leave this field blank. Finally, click on "Save and Close".

Once a mortgage has been added to QuickBooks, you can monitor the principal, interest, and escrow balances of your loan and make payments directly to your lenders. This will help you stay on top of your outstanding mortgages. Additionally, by integrating mortgage and escrow payments, you can streamline financial management, track obligations, and ensure proper reporting for budgeting, loan applications, and tax compliance.

Setting up a mortgage account

Firstly, you will need to select "Chart of Accounts" from the "Lists" menu at the top of the screen and click "New". Then, choose "Long-Term Liability" from the Type drop-down list. You will need to set up accounts for your mortgage principal, interest, and escrow payments, if applicable. Enter the title of your mortgage account in the "Loan" field, using the term "Principal".

When you make a monthly payment in QuickBooks, the transaction needs to be split into three lines. The principal payment is applied to the Long-Term Liability Mortgage to pay down the loan, the interest payment is booked under an Interest Expense account, and the Escrow payment is applied to an Other Current Asset account. The Escrow payment is simply money given to another party to hold until certain payments, such as home insurance premiums and tax payments, are due.

It is important to regularly reconcile your loan statements with your QuickBooks records to ensure all entries are accurate. You should maintain detailed records of all loan-related documents, including payment schedules and correspondence with lenders.

Recording principal and interest payments

To record principal and interest payments in QuickBooks, you need to set up accounts for your mortgage principal, interest, and escrow payments.

Firstly, select "Chart of Accounts" from the "Lists" menu at the top of the screen and click "New." Choose Long Term Liability from the "Type" drop-down list. You can then enter the title of your mortgage account in the "Loan" field, using the term "Principal."

Next, you need to set up an expense account for the interest payments. To do this, go to the List menu, then select Chart of Accounts. Right-click anywhere, then select New. Select Expense, then Continue. Enter the account name for the interest payments or fees and charges, then select Save and Close.

Once you have set up these accounts, you can record the loan amount by depositing it for cash loans. You can also write a check posted to the appropriate expense account used for tracking loan interest.

If you are making an electronic payment to your loan periodically, you should use Write Check for payment against principal (the COA account) and post interest as a charge. To do this properly, the loan should be set up as a credit card type, and you can enter the interest as a cc charge.

You can also use QuickBooks Loan Manager to track your loans and be reminded about upcoming payments.

Reconciling loan statements

To reconcile a loan statement, first, click on the drop-down menu under "Accounts" and select the account you want to reconcile. Then, enter the "Beginning balance", "Ending balance", and "Ending date" based on your bank statement information. Match transactions to your bank statement and check them off one by one. Apply filters to make transactions easier to find. Keep going until the "Difference" field is zero and you see the "Success!" page.

If you are using the Desktop version of QuickBooks, you can select "Other Current Liability" for short-term loans and "Long-Term Liability" for long-term loans. This will help you track the portion of a loan payment. Go to the "Lists" menu, then select "Chart of Accounts". From the "Account" drop-down, click "New". Select "Other Account Types", then "Other Current Liability" or "Long-Term Liability". Click "Continue", enter the account name, then "Save & Close".

For interest-only payments, you can write a check posted to the appropriate expense account used for tracking loan interest. But first, you'll have to set up an expense account. Go to the "List" menu, then select "Chart of Accounts". Right-click anywhere, then select "New". Select "Expense", then "Continue". Enter the account name for the interest payments or fees and charges, then select "Save and Close". To record the loan amount, deposit it for cash loans.

Frequently asked questions