Mortgage principle & interest do not jive

I recently took out my first mortgage. It's rather simple - 6.5% interest on
a $27,000 loan. I am trying to record the payments in Microsoft Money but
when I do, it automatically calculates the interest and principal but the
figures are slightly off from what my credit union says.

I want this to automatically calculate the CORRECT figures. I have all of
the information available in the loan terms and details. So, where can I
find the source of this error and get it corrected? I'm only like $1.76 off
on my final loan balance, but I find it highly annoying that Microsoft Money
is not calculating the interest correctly. This is a rather simple
calculation.

Thanks,
Jeff

via_newsgroup
Wed May 25 10:59:52 CDT 2005

In microsoft.public.money, Jeff P wrote:

>I recently took out my first mortgage. It's rather simple - 6.5% interest on
>a $27,000 loan. I am trying to record the payments in Microsoft Money but
>when I do, it automatically calculates the interest and principal but the
>figures are slightly off from what my credit union says.
>
>I want this to automatically calculate the CORRECT figures. I have all of
>the information available in the loan terms and details. So, where can I
>find the source of this error and get it corrected? I'm only like $1.76 off
>on my final loan balance, but I find it highly annoying that Microsoft Money
>is not calculating the interest correctly. This is a rather simple
>calculation.

Enter the terms of the loan, except for interest rate-- leave that
blank. Let Money calculate the interest.

If you define "CORRECT" as whatever the credit union says, you may
not be able to do what you ask. Find some mortgage amortization
calculators on the web, and see what results THEY come up with. Do
they agree with Money, or do they agree with your CU's figures?

Jeff
Wed May 25 12:10:29 CDT 2005




"Cal Learner-- MVP" <via_newsgroup@please.tnx> wrote in message
news:7189911p37pqsh0qa05058fjb8g6rgsf8h@4ax.com...
> In microsoft.public.money, Jeff P wrote:
>
>>I recently took out my first mortgage. It's rather simple - 6.5% interest
>>on
>>a $27,000 loan. I am trying to record the payments in Microsoft Money but
>>when I do, it automatically calculates the interest and principal but the
>>figures are slightly off from what my credit union says.
>>
>>I want this to automatically calculate the CORRECT figures. I have all of
>>the information available in the loan terms and details. So, where can I
>>find the source of this error and get it corrected? I'm only like $1.76
>>off
>>on my final loan balance, but I find it highly annoying that Microsoft
>>Money
>>is not calculating the interest correctly. This is a rather simple
>>calculation.
>
> Enter the terms of the loan, except for interest rate-- leave that
> blank. Let Money calculate the interest.
>
> If you define "CORRECT" as whatever the credit union says, you may
> not be able to do what you ask. Find some mortgage amortization
> calculators on the web, and see what results THEY come up with. Do
> they agree with Money, or do they agree with your CU's figures?
>

I define correct as what can be calculated from the information in actual
contract I signed. If the credit union is not calculating the numbers right
then they better darned well learn how to do math. On the other hand, if
Microsoft Money isn't doing it right, it better well learn how to do math
too.

I've looked at a lot of those online mortgage calculators but most of them
are strictly for monthly estimations. Do you know of any that specifically
calculate daily interest based on a varying date that you actually remitted
each individual payment (instead of a scheduled due date)?

Thanks,
Jeff

via_newsgroup
Wed May 25 12:50:38 CDT 2005

In microsoft.public.money, Jeff P wrote:

>I define correct as what can be calculated from the information in actual
>contract I signed.

Oh... Money probably won't do that. The best you can do is enter the
payments, and amounts. Let Money compute the interest rate.

> If the credit union is not calculating the numbers right
>then they better darned well learn how to do math. On the other hand, if
>Microsoft Money isn't doing it right, it better well learn how to do math
>too.
>
>I've looked at a lot of those online mortgage calculators but most of them
>are strictly for monthly estimations. Do you know of any that specifically
>calculate daily interest based on a varying date that you actually remitted
>each individual payment (instead of a scheduled due date)?

Here are some that I think look as if they could be of use that
could be of use:

http://www.bankrate.com/brm/calculators/mortgages.asp

https://www.eloan.com/s/amortcalc

http://www.vertex42.com/ExcelTemplates/excel-amortization-spreadsheet.html

Dick
Wed May 25 19:39:04 CDT 2005

And what number do **you** get when you calculate it **by hand** using the
**math** and **the information in the actual contract you signed**?

One example (out of many subtle ways that could account for errors like your
1 part in 18,000 or so) way banks throw this off: You close on the 16th of
the month. The actually collect interest for your renting the money for,
say, 30 years and 14 days. The extra 14 days throws off the numbers.

"Jeff P" <jeffpNO@SPAMruralramp.net> wrote in message
news:1199ccf7ekp0a06@corp.supernews.com...
> I define correct as what can be calculated from the information in actual
> contract I signed. If the credit union is not calculating the numbers
> right then they better darned well learn how to do math. On the other
> hand, if Microsoft Money isn't doing it right, it better well learn how to
> do math too.

Chris
Wed May 25 21:09:42 CDT 2005

There are many nuances to how mortgage interest can be calculated, that
Money simply cannot do. Expecting a $20 personal finance program to handle
every possible variation is unrealistic.

Enter the principal, term and p&i payment. Let Money calculate what it
thinks the interest is. Ignore the difference if it's off by a very small
amount. The monthly payments will be grossly correct and very close to the
amount in the amortization schedule provided by the bank.

At the end of tax each year, balance the loan account with your mortgage
statement. Post a transaction directly into the loan account using the
'other' transaction type. (Click the 'new' button, you'll see what I mean.)
Increase or decrease the principal balance to reflect what the bank tells
you it is. Categorize it as mortgage interest. Principal and annual interest
will now jive with the bank.

The very small annual correction isn't worth a lot of angst, since the IRS
is going to go by what the bank says, anyway.

If you want to do this exactly to the level of detail you seem to expect,
build it in a spreadsheet.
--
Chris Cowles
Gainesville, FL


"Jeff P" <jeffpNO@SPAMruralramp.net> wrote in message
news:1199ccf7ekp0a06@corp.supernews.com...
>
> I define correct as what can be calculated from the information in actual
> contract I signed. If the credit union is not calculating the numbers
> right then they better darned well learn how to do math. On the other
> hand, if Microsoft Money isn't doing it right, it better well learn how to
> do math too.
>
> I've looked at a lot of those online mortgage calculators but most of them
> are strictly for monthly estimations. Do you know of any that specifically
> calculate daily interest based on a varying date that you actually
> remitted each individual payment (instead of a scheduled due date)?

Jeff
Wed May 25 23:41:12 CDT 2005


> If you want to do this exactly to the level of detail you seem to expect,
> build it in a spreadsheet.

But, I don't want a spreadsheet. I have 10 years of transaction history
recorded down to the penny in the transaction registers of Microsoft Money
and I have no intention of stopping this over some round off error in some
inaccurately stupified interest calculation formula. There has to be a way
to fix this.

-Jeff

Dick
Thu May 26 07:30:33 CDT 2005

Two ways: 1) Don't use a loan type account. Use a liability account and
enter the bank's computation of the interest by hand. 2) After entering the
scheduled transaction, edit the transaction in the register and make the P/I
numbers match the bank's. This may not "fix" it in the sense of make it
match any particular way to calculate the numbers, but it may fix it in the
sense that it will match your bank and the balances will track to the penny.

Your presumption seems to be that there is a correct answer and Money
doesn't get it and the credit union does. I'll ask you again: what number do
you get when you calculate this given what the bank has told you?

"Jeff P" <jeffpNO@SPAMruralramp.net> wrote in message
news:119akrlpngueje4@corp.supernews.com...
> There has to be a way to fix this.

Chris
Thu May 26 21:43:15 CDT 2005

If you mean "there has to be a way to fix this /in Money/", no, there
doesn't /have/ to be.

Don't get angry at volunteers providing answers you don't like. We're trying
to help you do it as well as can be done within Money. If it can't be done
as well as you'd like in Money, you either have to accept that or look for
another solution.
--
Chris Cowles
Gainesville, FL



"Jeff P" <jeffpNO@SPAMruralramp.net> wrote in message
news:119akrlpngueje4@corp.supernews.com...
> There has to be a way to fix this.

arnstein
Tue Jun 21 22:15:30 CDT 2005

There were many responses to the original post, but I did not see a
really attractive solution. Some of you seem to criticize the original
poster, for expecting Microsoft Money to correctly calculate his monthly
interest/principal payment. Is this not a reasonable expectation for
a consumer software product?

I run Microsoft Money 2005 and Quicken 2005 in parallel. I am new to
Microsoft Money, but I have been using Quicken for 8 years. In that
time, I have had three different mortgages. Quicken has correctly
computed my monthly interest/principal payments. Correct to the penny.
Every month. For 8 years.

I have been using Money for about a year now. Each month, I have to
correct Money's computation of interest/principal. It is always wrong.

My experience with Quicken suggests that it *is* reasonable to expect
a consumer software product to calculate mortgage payments in the same
way that the lender does.
--
David Arnstein
arnstein+usenet@pobox.com

Dick
Tue Jun 21 23:51:15 CDT 2005

It's a reasonable expectation IF and only IF the person holding it can
define what number he calculates and how he calculates it. Beyond that all
we are doing is speculating from the basis that there is only one correct
way to calculate it and Money gets it wrong ****but has been provided all of
the information it takes to get it right**** and the bank gets it right.

All these years Quicken was getting it right for you, was Quicken actually
**calculating** these amounts for you or was it just taking some bank's word
for it in the form of downloaded transaction data?

Money's **calculated** interest expense for my mortgage last year was off by
$0.06 or 1 part in 60,000 or so. That's less than a penny a payment or
certainly in the territory of different ways to treat rounding error. For my
purposes that's certainly close enough--at the end of a 30 year loan, we'd
disagree on the balance by what, $1.80? If you are off by much more than
that, I'd wonder if the loan is setup correctly in Money.

But by all means if you think 1 part in 60,000 is a problem and Quicken does
this better, go for it.
http://www.buy.com/retail/product.asp?sku=20362400&loc=105&sp=1

"David Arnstein" <arnstein@panix.com> wrote in message
news:d9al4i$7pn$1@reader1.panix.com...
> Is this not a reasonable expectation for
> a consumer software product?

arnstein
Wed Jun 22 01:42:21 CDT 2005

In article <e2poBYudFHA.720@TK2MSFTNGP15.phx.gbl>,
Dick Watson <littlegreengecko@mind-enufalready-spring.com> wrote:
>All these years Quicken was getting it right for you, was Quicken actually
>**calculating** these amounts for you or was it just taking some bank's word
>for it in the form of downloaded transaction data?

I have never downloaded mortgage data into Quicken (or Money). For
both programs, I use the function for making a regular mortgage payment.
I do this every month. Thirty days later, I get a statement from the
lender which discloses the details (interest and principal payments)
of the previous payment.
--
David Arnstein
arnstein+usenet@pobox.com

Dick
Wed Jun 22 07:32:02 CDT 2005

For laughs, I just checked and my mortgage has accumulated a balance error
between Money and the lender of $0.12 after 22 months. That's still awfully
close to $0.005 per payment. How far off are you each month?

"David Arnstein" <arnstein@panix.com> wrote in message
news:d9b18d$ap9$1@reader1.panix.com...
> I have never downloaded mortgage data into Quicken (or Money). For
> both programs, I use the function for making a regular mortgage payment.
> I do this every month. Thirty days later, I get a statement from the
> lender which discloses the details (interest and principal payments)
> of the previous payment.