Why isn't my loan balance accurate on the balance sheet?
There are several reasons that the balance of your mortgage or loan account may not reflect accurately on your balance sheet report or account register. The most common causes are missing opening balances, missing loan payment transactions, and incorrect principal/ interest breakdowns of your loan payments.
Opening balances
In REI Hub, the 'book balance' of accounts is computed based only on the actual journal entries (transactions) present in the system. The book balance of an account is visible on the balance sheet or account register. Click on the name of a loan account from the Loans page to see its account register:
As you set up your loan account and fill out the loan payment template, you will be asked for a 'Current Loan Balance' and date. This value is used to calculate amortization but does not create a journal entry in the system. The 'Current Loan Balance' works to help us get the automation up and running but doesn't function as an opening balance.
It works this way because many users want to book their loan payments and automate the principal/ interest/ escrow split as quickly as possible but aren't necessarily concerned with the balance sheet.
The loan balance on the balance sheet and the loan account's register page only include the journal entries (transactions) for each respective account. If all that is in the system are loan payment transactions, the balance sheet will only reflect the amount of principal paydown. Once you add an opening balance for the loan, we should see the total display correctly (opening balance minus the loan payments).
Depending on how recently you acquired the loan, you can add the opening balance (if the loan originated before this year) or add it with the property purchase journal entry (if it's a new loan in this accounting period).
The balance value on the Loans page is from the current loan balance in the loan payment template, adjusted for recent payments. It is not the same as the loan book balance (visible on the register page and balance sheet). We recognize that this can be confusing, and we plan to update this area in the future.
Incorrectly booked, ignored, or missing loan payment transactions
Another reason your loan balances can be off is if some loan payments have not yet been booked or have been booked incorrectly. Some things to look for include:
- Unbooked loan payments. If some or all payments have not been booked, then the loan balance will not have been updated appropriately based on the principal paydown from those payments.
- One reason loan payments may be unbooked is that the amount specified on the loan payment template has changed. Most frequently, this is due to changes in the amount of the escrow contribution required by your mortgage servicer.
- Loan payments are booked as expenses instead of as loan payments. If a loan payment includes the principal, it should not be booked as an expense. The exception is payments on an interest-only loan, which would not include principal paydown.
- Ignored loan payments. Similar to unbooked payments, ignored payments will not update the loan balance.
The best way to search for unbooked, incorrectly booked, or ignored loan payments is to visit the Import Feed and use the filter to search by the amount of your loan payment:
Incorrect principal interest escrow splits of loan payment transactions
One final potential cause of the discrepancy between your actual loan balance and the loan balance in REI Hub is if your payments have been booked with incorrect principal/interest/escrow splits. Even if all your loan payments were booked, having incorrect principal/interest splits would cause your loan balance to be off.
If none of the above seems to be the issue, please contact the REI Hub support team for further troubleshooting!