When paying monthly towards a mortgage or loan, your money likely goes towards multiple balances:
- Principal
- Interest
- Escrow
The Interest and Escrow payments do not impact your loan/mortgage's valuation, so adding accompanying transactions for these makes the valuation more accurate.
Example: If I have a mortgage with a balance of $421221.42 and an APR of 2.625%, then synchronize a transaction from my savings account, a portion of that payment went towards interest and escrow. Those portions should not deduct from my overall balance, as they were not paid towards the principal.
The Mortgages feature will automatically create transactions that offset these payment types, so that the balance of your account is more accurate:
The interest due on a certain date can typically be calculated as interest = current balance * (apr / 100 / 12) or 421221.42 * (2.625 / 100 / 12) = 921.42
Escrow is typically static and divided evenly over the course of a year
Access the Mortgage/Loans feature in the top dropdown menu:
Choose a Maybe account of type Loan, specify your APR, Escrow Payment (or 0 if you do not wish to create an Escrow transaction), and Day of Month to create the transactions on.
If you'd the inserted transactions to be considered One-Time in Maybe (and thus *not* included in Budgeting, etc.), use the Exclude checkbox:
- Set the Day of Month to be a few days before your payment/transaction takes place so that the interest calculation uses the appropriate balance