Tracking additional principal paid

Many real estate investors choose to pay down their mortgages and loans faster by paying additional principal above and beyond what their monthly payment requires. How you will handle this in REI Hub depends on how you pay that additional principal. There are three ways we typically see this happen:

Paying additional principal with each mortgage payment

Our loan payment template can accommodate situations where you pay extra principal in every payment. The 'Monthly Payment Amount' in the loan payment template should be set to the actual amount paid monthly - not just the 'required' payment amount. The automation works by using the exact amount of the recurring payment to identify the transaction we should apply the loan payment logic to - so it does need to be the exact same amount every month.

When setting up the payment template, we ask for a point-in-time loan balance to ensure that the system can accurately calculate interest based on your amortization schedule. The current loan balance times the interest rate gives us the interest contribution. Any escrow contribution is a flat rate, and the remainder goes to the principal. That's why the math works for both payments in the exact amount and payments with the extra principal!

So, if you are adding additional principal to every payment, simply set the loan payment template to use the total amount, inclusive of the additional principal, as the monthly payment amount.

One-time lump sum principal payments, separate from standard payments

If you make a principal-only payment, the loan payment template does not need to be updated, as the lump sum payment does not include principal and interest. The principal-only payment can be booked in two ways:

First, you could select the Loan Payment transaction type. Since the amount won't match the payment template, the system won't break out principal/interest/escrow for you but will ask you to make the breakdown manually. You would simply put the full value into the principal line, leaving interest and escrow blank.

Second, you could select the 'Transfer Between Accounts' transaction type and select the loan account as the 'transferred to' account, which results in a principal paydown transaction.

One-time lump sum principal payment included with a standard payment

If you occasionally, but do not always add additional principal, you will set up the loan payment template to be the base amount of your payment (the standard required payment). Every time you pay without additional principal, it will get automatically booked. However, in the months you make a payment with additional principal, the loan payment template won't automatically book it since the total payment amount differs from what the automation is looking for.

On these months, you would simply split the imported mortgage payment transaction in the import feed into two amounts - one that is the same as your standard payment, and one that is the amount of your additional principal payment. You can then book the standard payment as normal - the loan payment template will pick it up. The principal-only payment can be booked in two ways (as described above):

First, you could select the Loan Payment transaction type. Since the amount doesn't match the payment template, the system won't break out principal/interest/escrow for you but will ask you to do so manually. You would simply put the full value into the principal line, leaving interest and escrow blank.

Second, you could select the 'Transfer Between Accounts' transaction type and select the loan account as the 'transferred to' account, which results in a principal paydown transaction.

Reach out to the REI Hub support team with any questions!