Generally Accepted Accounting Principles (GAAP) require discounting of zero-interest mortgages used by Habitat for Humanity affiliates. This will more fairly reflect the value of the mortgages on your affiliate’s financial statements because of the time value of money. Charging no interest is both an economic benefit to the homeowner and a cost to the affiliate. This cost should be calculated annually for your affiliate and entered into your accounting records.
Each new mortgage requires a one-time entry into the Mortgage Discounting utility of four pieces of data in the year of origination: 1) the date the mortgage closed, 2) total value of the mortgage, 3) term of the mortgage in months, and 4) the monthly principal payment. No other entry is required unless the mortgage is retired early.
With multiple mortgages, different rates, and different maturity, the mortgage discounting calculations can get rather complicated. The Mortgage Discounting program offered by MTD calculates this discount annually for you. The end results of the calculations are the accounting entries you need for your records.
This MTD Mortgage Discounting program is provided at no charge to Habitat affiliates by MoreThanData. Version 1.3 of this program (released 2011) is now available. There are four files that are required to generate the Mortgage Discounting information you need. These are listed below.
Mortgage Discounting – V1.3 (Released 2011)
Or download the files individually:
- Read Me First (PDF)
- Mortgage Discounting Notes (PDF)
- Mortgage Discounting Workbook (Microsoft Excel) – (Last Revised – 2011)
- Mortgage Discounting Worksheet for Historical Data (Microsoft Excel)
For more information about the Mortgage Discounting utility, contact MTD Support by phone toll-free at 1-800-455-5617, or via e-mail at firstname.lastname@example.org.