Mortgage and escrow accounting
A mortgage payment has more than one job.
Keep principal, interest and escrow detail connected to the loan, property and statement that explain each payment.
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- Loan balances by property
- Reviewed payment splits
- Separate escrow contributions and payments
Start with lender records
Add the loan and its opening balance using a documented starting date. The bank withdrawal is a payment total; the lender statement supplies its components. Keep both records with the property.
Prepare the split
Use a mortgage payment template for principal, interest and escrow. Confirm that the components equal the withdrawal, and review changes in interest, escrow or other charges instead of repeating an old split without checking.
Follow the escrow balance
An escrow contribution is money held for a later payment. Record the lender disbursement separately when supported by the statement. Compare the escrow register with the lender balance so contributions and expenses are not confused.
Review the loan over time
Check loan activity after booking and compare the ending principal with the statement. Keep refinancing, extra principal and payoff records distinct from routine payments. Ask your accountant to confirm unfamiliar transaction treatment.
Put the workflow into practice