Moneydance 2017 - Loan Accounts

How Loan Accounts work -

When creating a loan you may enter payments manually, or choose to schedule a recurring transaction reminder which will allow Moneydance to track how many payments have been made on your loan, how many are left, and the interest to principal ratio.

Most financial institutions use slightly different methods of calculating the interest on a per-payment basis, so you should verify these amounts against the principal and interest amounts in your payment schedule.

Scheduling Loan Payment Reminders -

Recording loan payments in Moneydance can be made easier using loan payment reminders. These are special reminders that automatically split the payment between principal, interest and escrow amounts based on the settings of a loan account.

To create a loan payment reminder, open the loan account and then click the Actions → Payment Reminder button/menu. This will display a window where you can modify the accounts, categories, and schedule the payment reminders.

You can read more about General Reminders and Transaction Reminders in this article.

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Entering an Existing Loan -

The following instructions are for setting up a loan account with a fixed rate that has been in existence and you have been making payments prior to using Moneydance. You will need to know the original loan amount, the correct interest rate, the current loan balance, the correct loan payment (principle plus interest), and the additional escrow amount, if any.

First we will setup the loan, including the reminder. Then we will edit the loan to get the correct balance and number of payments remaining.

  1. Setup a new Loan account. From the Menu select Account → New Account → Loan. Click Next.

    • When the 'Create Account: Loan' window appears fill in the fields carefully.
    • Name the Loan. Call it Home Mortgage or something meaningful to you.
  2. Enter the ORIGINAL amount of the loan. This will calculate a loan payment in the Calculate Payment field which you can read about at the bottom of this article. The original amount is available on your loan disclosure documents or from previous mortgage statement.

  3. Enter the correct interest rate. This will recalculate the loan payment. The loan rate will be available from your annual mortgage statement.

    • Payments per year defaults to 12. Change this only if your loan is structured differently.
  4. Enter the number of payments. A 30 year mortgage will have 360 payments. This will recalculate the loan payment and it should be equal to your actual loan payment before any escrow payments, mortgage insurance, or other charges are added. If it is not even close, then some of the above figures you entered are incorrect.

  5. Set the Interest Category to the appropriate category.

  6. Enter the Escrow Payment amount. This recalculates the Payment Amount and it should equal exactly what your payment is each month.

  7. Select the appropriate Escrow Account.

  8. Enter the original first payment due date in the Start Date field. Then click OK

    • A window pops up that asks if you would like to transfer this amount of this loan to an account. Answer NO unless you would like to record a deposit of the loan principal into another account.
    • Another window will pop up and ask you if you want to create a Reminder. Answer YES.
    • You can read more about Loan Reminders towards the start of this article.
  9. Enter the current due date in the First Date field within the Reminder window. This is different from the Start Date entered previously.

    • Select Monthly, Choose a Date to be reminded and specify the From Account: field. Leave check number blank, and enter the name of the loan holder in the Payee field.
    • Note that the Total Payment, including the escrow amount, is equal to your monthly payment. Then click OK
    • The Loan should appear in the Sidebar and on the Summary with the original loan balance.
  10. Select the Loan from the Sidebar and note that the loan information appears in the upper right hand corner. The number of payments remaining is 360.

  11. Select Account → Edit Account from the menu.

    • When the 'Account Info: Loan' window appears, select Specify Payment and enter your regular monthly payment amount.
  12. Change the Principal field to match the Current Balance of the loan provided by your mortgage holder. Then click OK.

    • A window will appear that asks if you would like to transfer this amount of this loan to an account. Answer NO.
  13. Select the Loan from the Sidebar - it should now display the correct Principal Remaining, # of payments remaining, and the Upcoming Payment should have the correct Principle and Interest amounts, as well as, Escrow amount reflected.

    • If you use the Reminder to enter the transaction for your mortgage payment in MD going forward, the correct amortization should be calculated automatically for this loan.

The Loan Calculator Tool -

The Loan Calculator calculates the amount of loan payments, as well as the total interest and total paid for a loan. It is located under Tools → Loan Calculator.

To complete this screen, follow the steps below -

  • Choose the appropriate currency.
  • Input the principal amount you intend to borrow.
  • Input the anticipated interest rate you'll be charged.
  • If appropriate input the loan points.
  • Input the number of payments per year. Use the drop down arrow if necessary to change the number of payments.
  • Input the number of years over which you will be repaying the debt.

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The Loan Calculator will calculate the principal and interest for each subsequent payment until the loan has been completely repaid. The loan calculator will also summarize the total payment that you will make (principal plus interest), the total interest that you will pay, and the total amount you will pay (both principal and interest added together).

The Moneydance Loan Calculator also provides a "Points vs. Rates" scenario. Many lenders will offer a lower rate in exchange for "points" paid up front. The "points" refer to a percentage of the loan amount that is paid at the time the loan is given. Paying this initial fee in exchange for a lower rate often makes sense if you expect to keep the loan for a certain period of time. Click on the Points vs. Rates tab to access this feature.

The Points vs. Rate tool will show you the break-even point for any two combinations of points and interest rates. To show a comparison between two scenarios, fill in the information in the top portion of the screen and Moneydance will assist you with making a recommendation as to which financing choice would be best.