On 1/30/2022 9:40 PM, Al Maloney wrote:
Victor
Thanks.
What you say about formulae and bank practice makes sense to me.
Your advice says to me: "Don't sweat the small stuff".
Al Maloney
Velox Versutus Vigilans
Speaking as somebody who has written software to produce mortgage
amortization tables, don't sweat it. It would be close to impossible for
you to exactly match what the bank has. The problem is that there are
simply too many places where assumptions being made, where rounding, how
to treat the odd amount at the end, etc. for example, that an exact
match cannot be expected. I actually did have a program that could
produce a table to match (given the payment according to the bank) but
that used automated "trial and error" adjustment until it did match as
opposed to a calculation.
If you get a "statement" for each payment from the lender indicated how
the payment broken down between principle, interest, and escrow (taxes,
insurance, etc.) you can do it in a two step process. Create an extra
account under expenses with a useful name like "mortgage payment"
(meaning not yet allocated) and have your scheduled transaction use this
for the debit. Then when you have the statement you can transfer (credit
this) splitting the debits between "mortgage interest" (an expense),
"mortgage balance" (a liability), and "mortgage escrow" (an asset) ---
later when you get notified that th escrow account has been used to make
a tax payment, an insurance payment, etc. you can enter those against
the escrow account.
BTW -- it is really tricky (and so the amount the bank is collecting) to
do the escrow calculation because this usually isn't an amount that will
collect enough over the year to equal those expenses but an amount that
also will keep the escrow account positive at all times (in other words,
a "cash flow" calculation). That's why the amount will jump around year
to year even if your taxes and insurance amounts remain relatively constant.
Michael D Novack
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