How to Amortize Mortgage Point Expenses
Amortize the deferred loan costs (points) paid at the inception of a mortgage over the contractual life of the loan.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Interest Expense | Debit | 350.00 | - |
| Unamortized Loan Fees | Credit | - | 350.00 |
💡 Accountant's Note
Loan points are considered prepaid interest and must be expensed over the term of the loan using the effective interest method or straight-line method if not materially different.
Practitioner & Systems Framework
💻 ERP Architecture
Set up as a recurring monthly journal entry in the fixed asset or amortization module.
⚠️ Audit Flags
Incorrect amortization periods or failure to accelerate amortization upon loan refinancing or payoff.
📄 Required Documentation
Loan closing statement (HUD-1) and the amortization schedule.
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Expert Analysis by Qusai Ahmad
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