7.3. House Mortgage (How-To)
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## 7.3. House Mortgage (How-To)

A house mortgage can be setup using the account structure present in the previous section.

As an example, assume you have $60k in you bank account, and you buy a $150k house. The mortgage is charging 6% APR, and has administrative fees (closing costs, etc) of 3%. You decide to put $50k down, and thus will need to borrow $103k, which will give you $100 after the closing costs are paid (3% of $100k).

You accounts before borrowing the money:

Accounts Before Receiving Loan

The purchase of the house is recorded with a split transaction in the Asset:House account, with $50k coming from the bank (IE: your down payment), and $100k coming from the Mortgage. You can place the $3k closing costs in the same split.

Table 7.1. Buying a House Split Transaction

Account | Increase | Decrease
Assets:House | $150,000 |
Assets:Bank |  | $50,000
Liabilities:Mortgage |  | $103,000
Expenses:Mortgage Adm Fees | $3000 |

The split will look like this in the Assets:House Account:

Mortgage Split Transaction

Which will give account totals like this:

Mortgage Account

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7.2. Setting Up Accounts | Up | 7.4. Calculations