unofficial microsoft.public.money FAQ and A
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How to do things in Money: Mortgages and stuff

Q) I just refinanced my mortgage; how do I enter all of this into Money?

A) In some versions, there's a wizard of limited utility, you can navigate to it by going to your current loan page, click Analyze Loan|Consider Refinancing. This takes you to a page called Loan Worksheet. You can go through the steps, or, if you have already decided on if/where to refinance, skip to Comparison and at the bottom of the worksheet click on Refinance a Loan button. Thanks to Aloke Prasad for these steps. Somewhere along the way they removed even this wizard. Can't say exactly where, but it's missing from M07.

The wizard doesn't attempt to deal with all of the things like closing costs and escrow exchanges; one that did would be hard to devise given the number of different ways this could go down and the number of different ways this could be recorded in Money. This basic outline applies no matter whether you are ending in cash in or cash out--enter the splits off of the settlement sheet and all should work out.

To do this by hand, remember: the split is your friend. You can enter the whole thing in two transactions that mirror the information provided on the settlement sheet at your closing.

For an example (and there are certainly other ways it could be done) here are related transactions from the last time I refinanced. These are in MoneyLink format. It may be easier to read if you get the whole thing into Excel as .CSV.

Acct,Payee,Reconciled,Amt,Cat:SubCat,Comment

1st transaction:
"[temp account, pick one]",[new payee],R,xxx,000.00,Other Income:Loan Principal Received,total refi {categorized as other income since M99 would not allow direct transfer from here to old loan payoff}
"[temp account, pick one]",[new payee],R,(300.00),Miscellaneous:Service Charges/Fees,administration fee to mortgage broker
"[temp account, pick one]",[new payee],R,(362.50),Miscellaneous:Service Charges/Fees,escrow waiver fee to new payee
"[temp account, pick one]",[new payee],R,(zzz.94),Interest Expense:Mortgage Interest,prepaid interest on new loan
"[temp account, pick one]",[new payee],R,(150.00),Miscellaneous:Service Charges/Fees,settlement fee to title company
"[temp account, pick one]",[new payee],R,(430.00),Insurance:Title,title company
"[temp account, pick one]",[new payee],R,(20.00),Miscellaneous:Service Charges/Fees,tax certificates to title company
"[temp account, pick one]",[new payee],R,(30.00),Miscellaneous:Service Charges/Fees,express mail charges for payoff
"[temp account, pick one]",[new payee],R,(50.00),Miscellaneous:Service Charges/Fees,"endorsement/100 & 8.1" to title company
"[temp account, pick one]",[new payee],R,(61.00),Miscellaneous:Service Charges/Fees,recording fees
"[temp account, pick one]",[new payee],R,(6.00),Miscellaneous:Service Charges/Fees,"assignment fee"
"[temp account, pick one]",[new payee],R,(aaa.96),Interest Expense:Mortgage Interest,interest portion of payoff
"[temp account, pick one]",[new payee],R,(yyy,694.64),Transfer:[money market account],{this was a cash out balance}

2nd transaction (a Loan Payment with one split element):
"[temp account, pick one]",[old payee],R,(yyy,190.96),Principal Transfer:[old mortgage loan account],payoff amount of old loan

Note that only one new account, the new loan, was setup and that some of the categories may not be standard. For the temp account, I used my pocket change account, but see below for more information.

Note also that I had no escrow for insurance/taxes on either side of this deal. If you have an existing escrow account setup and plan on setting up a new one for the new mortgage, you can do the same basic thing: transfer the existing escrow balance into the first transaction and/or transfer funds as required from the first transaction to the new account.

It doesn't matter which account you put the transaction in, but if you are writing a check at closing or getting a payout, you may want to include this in that account just to make things clearer. The sum of the first transaction and the second transaction should be zero unless you want to have the non-zero net of the two transactions represent cash in or out at closing.

The only reason this needs to be done as two transactions is that the payoff principal payment to the old loan becomes a principal transfer in that account which Money treats like a split--and a split cannot be part of another split.

Similarly, bear in mind that the only way to transfer principal to a loan account, at least in recent versions of Money, is to start with a Loan Payment and use the Principal Transfer portion of the split it proposes. You can delete the interest expense component if you want, but the Principal Transfer component of a Loan Payment is treated as sacred by Money.

You original loan may show some minor debit or credit balance after the payoff transfer due to differences in how Money and the lender have computed interest over time. (Mine was $0.43.) You can just write this difference off with an Account Adjustment income or expense transaction entered at the end of the old loan before you close the account.

Money provides no direct way to account for loan proceeds received. So, I just entered this by hand as noted. The category had to be created and was defined to not show up on tax reports. If you are an accounting maven and are concerned that this really isn't accounting income, then you can leave the category unassigned. Alternately, see "How can I transfer money (to / from) the loan I (made / borrowed)?" for the workaround.

Please see this disclaimer if you are using Money 2005 or this comment if you are using Money 2006.

If this kind of stuff is important to you: