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Author
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Topic: Mortgage amortization with prepayment
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FN_User
Member
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posted 12-30-2008 08:58 AM
 
My question is whether the FN mortgage receivable program will handle a large prepayment and thereafter recompute the proper allocation between principal and interest.
The facts are these: I sold a house in 2008 in a private sale and I took back the mortgage.
At the proposed time of the repayment (in Jan 2009), the balance of the mortgage will be $1,348,576.79.
The prepayment will be $348,576.79 (to bring the mortgage amount down to $1,000,000)
The interest rate is 4.21% per annum
The original term of the loan was 360 months (of which 6 months will have been paid before the prepayment)
The current monthly payment, including principal and interest, is $6,658.57 and it is critical that this monthly payment be maintained after the the prepayment.
So in effect the prepayment will result in a shorter term for payoff of the mortgage and a larger allocation of each monthly payment to principal.
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David
Administrator
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posted 12-30-2008 09:00 AM
Here’s the steps. Let me know if this works or if you have any questions. - Create a new asset account “Mortgage”
- Create a new income account “Mortgage interest received”
- Use Chart of Account or A&L Info screen to enter $1,348,576.79 starting balance in Mortgage.
- Enter $348,576.79 in checking or wherever payment is deposited.
- Select Transactions | Loan/Mortgage Receivable.
- Enter Borrower Name “Joe Smith Mortgage Payment.” Follow prompts to display Loan/Mortgage Receivable screen.
- Select Mortgage as the loan account. Notice the Loan Balance is automatically filled with the remaining balance of $1,000,000 from that account.
- Fill in the rest of the fields. Note the $6,658.57 Total Payment results in a large principle payment.
- Enter each payment as it is deposited in checking. Navigator correctly calculates the interest and principle payments.
The secret is entering the prepayment before you create the Loan/Mortgage Receivable. That way the Loan/Mortgage Receivable screen automatically picks up the remaining balance. Actually you could create the Loan/Mortgage Receivable anytime and change the Loan Balance to the $1,000,000 amount that you want. - David
FNI Technical Support
Case #38-10904
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