Property Mortgages

Audience: Landlords

Entering Mortgage Terms

When you add or edit a Property, there is a Mortgage Information section where you can enter the terms of your mortgage, such as down payment amount, first payment date, interest rate, and escrow amounts. This allows Housters to calculate the amortization schedule for the mortgage.

Principal vs. Interest

Each mortgage payment contains a portion of principal (paying back money owed on the mortgage) and interest. Mortgage principal is a liability (you owe that to the lender), whereas mortgage interest is an expense. When logging a mortgage payment transaction in Housters, it is important to add multiple transaction lines which specify the correct principal, interest, and escrow amounts. This will impact your dashboard summaries and reports, as mortgage interest and escrow amounts are expenses that impact your Operating Costs, whereas mortgage principal is not factored into Operating Costs but is factored into Cash Gain.

Mortgage Payment Transaction Types

Housters has created Transaction Types called “Mortgage Principal”, “Mortgage Interest”, “Taxes”, and “Insurance” that you can use when logging your mortgage payment Transactions. However, you can create custom Transaction Types as well. When adding a mortgage principal Transaction Type, make sure it’s in the Liabilities category and that it has “Is for Mortgage Principal Payments?” set to Yes. This will ensure that your mortgage payment Transactions are handled correctly when calculating dashboard summaries, reports, and mortgage balances.

When you choose to auto-save mortgage payments on the add / edit Property form, we will create a new mortgage principal Transaction Type for you called “Mortgage Principal – {your Property address}”. This allows those in double-entry accounting mode to track the balance on this Transaction Type (account), so long as they also added a Transaction that set up the initial balance for the property’s mortgage at closing.

Adding Mortgage Payment Transactions Automatically

If you want to add your mortgage payment Transactions automatically in Housters, enter your Property’s mortgage terms on the add / edit Property form and choose the “Auto-Save Future Mortgage Payments?” option. Each period when the mortgage payment is due, Housters will correctly calculate the individual principal, interest, and escrow amounts for you, based on the amortization schedule that is derived from the mortgage information that you entered.

If you wish to save all your old mortgage payment transactions too (back to when the mortgage was first created), you can choose the “Save Old Monthly Mortgage Payments?” option.

Adding Mortgage Payment Transactions Manually

If you want to add your mortgage payment transactions manually in Housters, we recommend that you first enter your Property’s mortgage terms on the add / edit Property form. Then go to the Transactions screen for that Property and choose the Add Mortgage Payment option from the Add Transaction dropdown. This will correctly calculate the individual principal, interest, and escrow amounts for you, based on the amortization schedule that is derived from the mortgage information that you entered. Otherwise, you will need to log the principal, interest, and escrow amounts for yourself, either by using your own calculations or by finding the amounts on your mortgage payment statement.

Extra Mortgage Principal Payments

If you made extra principal payments on the mortgage, this will throw off the amortization schedule so the calculated principal and interest amounts on mortgage payments will be wrong. To address this, you need to manually add Transactions with a type that is for mortgage principal payments (e.g. “Mortgage Principal”.) After adding the extra principal payments, future mortgage payments saved will factor them in and have the correct amounts (with more principal and less interest paid.)

Verifying Mortgage Payments

To verify that the principal and interest amounts are correct on the mortgage payment Transactions that you have logged, you can use the Mortgage Report. This will break down each mortgage payment period of the amortization schedule, show the expected principal amount, and what amount was logged in your Transactions. If the amounts match, it’ll show in green. If they don’t match, it’ll show in red. It will also show any extra principal payments that were made. Housters identifies any principal payment Transaction that doesn’t match the expected principal amount for that month as extra.

If your mortgage principal Transaction amounts don’t match up with the amortization schedule and the changes are minor, consider editing your mortgage payment Transactions to match the expected amounts. If your Transactions are way off, you can edit the Property and choose the “Save Old Mortgage Payments?” option. This will regenerate all of the mortgage payment Transactions for you, so then the amounts should match up. Note: Any mortgage payment Transactions that you added manually will not be deleted when you regenerate the old mortgage payment Transactions, only auto-generated Transactions will be deleted.