Free Amortization Calculator

Mortgages 2 Comments »

That’s right, you may download our free amortization calculator at the bottom of this page. The calculator is based on a typical 30 year fully amortized mortgage, and will show you right down to the penny how much money will be allocated to principle and interest each and every time you make a payment. Here is a preview of the xls spreadsheet:

Free Amortization Calculator
Input Area
Original Loan Amount $80,000.00
Interest Rate 6.500%
Automatic Calculation Area
Month (You may replace with Date) Total Payment (PI Only) Total to Principle Total to Interest New Balance
1 $505.65 $72.71 $432.94 $79,927.68
2 $505.65 $73.11 $432.55 $79,854.97
3 $505.65 $73.50 $432.15 $79,781.86
4 $505.65 $73.90 $431.75 $79,708.36
5 $505.65 $74.30 $431.35 $79,634.46
6 $505.65 $74.70 $430.95 $79,560.15
7 $505.65 $75.11 $430.55 $79,485.45
8 $505.65 $75.52 $430.14 $79,410.34
9 $505.65 $75.92 $429.73 $79,334.83
10 $505.65 $76.34 $429.32 $79,258.90

Read the rest of this entry »


Internal Tags: 

Like this article? Subscribe to my RSS feed.

80/15/5 Mortgage

Mortgages, Buying a Home 2 Comments »

Mortgage brokers sometimes speak of an 80/15/5 mortgage, but what is it exactly? In just a moment, I am going to show you exactly what it is, and how you can use it as a tool to leverage your money buying a home, or investing in real estate. There are many folks out there that do not have the appropriate cash to put down 20% on a home to get a conventional mortgage. This created a situation for potential home buyers, and thus the mortgage industry was created.

In recent years, mortgage companies had relaxed their criteria for lending money, and were granting no money down loans to people with bad credit, who had no business owning a home. These were sub-prime loans and carried too much interest expense for the buyer. So recently, there have been many foreclosures and mortgage companies along with banks have been tightening their policies on lending. In short, they want to see some money down before lending. However, with an 80/15/5 mortgage, you can setup a loan at prime rates with only 5% down.

Many mortgage companies even today will lend a straight 95% loan to buyer. So why hassle with the 80/15/5 mortgage? Because by getting two mortgages from the lender, you are able to avoid paying Private Mortgage Insurance (PMI), and you have to opportunity to select a shorter payoff on the second loan. The 15% second mortgage has a much smaller balance than the first mortgage of 80%, and the repayment period can be set to anywhere between 5 and 20 years, typically. So this means that you could select a 5 year payoff on the second mortgage, and your total mortgage payment will decline sharply after the first 5 years of payments. So to sum up, you would save the PMI payment, and in 5 years have a much lower total monthly payment. Let’s look at a quick example:

80/15/5 Mortgage Example
   
Sales Price $85,000.00
First Mortgage 80% of Sales Price $68,000.00
Second Mortgage 15% of Sales Price $12,750.00
Cash Down Payment 5% of Sales Price $4,250.00
   
* PMT on First Mortgage @ 7% APR for 30 Years $452.41
* PMT on Second Mortgage @ 7% APR for 5 Years $252.47
* Total Monthly Payment $704.87
   
* Single Mortgage of 95% of Sales Price, 7% APR for 30 Years $537.23
   
* Payment Difference $167.64
   
* Principle and Interest  
   
   

Now these payment figures do not include taxes and home owner’s insurance, but as you can see, the difference in the payment between an 80/15/5 mortgage and a 95% mortgage is $167.64. Now bear in mind, the 95% mortgage requires PMI, which was not included in this calculation. So if the PMI was say, $35 per month, then the payment difference would go down to $132.64. So after 5 years, the second mortgage would be paid off, and the payment would go down to $452.41 per month. This is the benefit of the 80/15/5 mortgage. On the short term, you are able to bypass PMI, and down the road, you will be able to cut your mortgage payment. Sound good?

Now if the lender does not want to approve the 80/15/5 mortgage, there is another option you can explore. When making your offer to the seller, have him give you a second mortgage to cover the 15%, and you can achieve the same result. You may have to pay a little more in interest on the second mortgage, depending on your negotiating skills, but in the long run, you stand to save a lot of money, without much of a difference in payment at the start.

Creative finance in real estate investing is very necessary if you are looking to get into properties with little or no money down. The 80/15/5 mortgage is just one way to obtain a new property without putting much money down. Questions? Comments? Leave them below in the comment area, and I will answer them ASAP. You may download the xls spreadsheet here:

80/15/5 Mortgage Example.xls

———————–

There are a number of cheap loans available in all banks. Getting such banking loans can be the ideal way to raise capital for a home business. Perhaps starting from a loan is not an ideal beginning, but such fast equity loans had evolved for this purpose basically.


Internal Tags: 

Like this article? Subscribe to my RSS feed.

Bi Weekly Mortgage Plan: Highway Robbery

Mortgages 1 Comment »

The bi weekly mortgage plan has devoured countless victims. Everyone has heard it - “Paying your mortgage bi weekly will save you 7 years of mortgage payments”. But do you know why? I would like to elaborate why the bi weekly mortgage plan is flawed, and show you the most effective way to calculate the necessary payment to payoff your mortgage on the best schedule - your schedule. But first, let’s look at some reasons why most bi weekly mortgage plans are flawed:

  1. The balance is only recalculated once a month.
    That’s right, even though you make 2, and sometimes 3 payments in a particular month, you mortgage balance is not reduced until the end of the billing cycle. This means that the mortgage company continues to collect interest on the mortgage balance as of the beginning of the billing cycle, so in effect, the lender gets to float your payment, and collect additional interest on it from other sources, until the end of the billing cycle. It’s like giving the lender a short term, no interest loan. Does that anger you? It should, because this is never disclosed openly to the borrower.
  2. Typically the payment is “drafted” from your account on a schedule.
    This is a pet peeve for me. This guarantees the lender that they will get first priority at your money, regardless of your circumstance. But Jeffry, it’s so much more convenient! Maybe, until you have an emergency, and need money fast, then you are up a creek. I never, under any circumstances, give anyone access to my main checking account. I pay my bills when I am ready to do so, and I suggest you do the same, even though it is slightly more trouble. Use a quality spreadsheet, like my Free Home Budget Spreadsheet, to ensure you get all your bills paid, every month.
  3. Often, the lender charges additional fees to setup the bi weekly mortgage plan.
    As if it is not enough that they get an interest free loan, draft your account automatically, they may have the nerve to charge another fee on top of all of this, to setup a bi weekly mortgage plan. It makes me sick to my stomach.

Ok, ok Jeffry, I see your point. But I still want to pay off my mortgage earlier, without having to come up with any additional money every month. This is the real misconception. Just because you are paying half of the would be monthly payment every bi week, doesn’t mean you are truly paying half the amount. About one month out of every six months, you will be making 3 payments, which is the only way for the bi weekly mortgage plan to show any benefits. So instead of making bi weekly payments, just do the math to make the equivalent monthly payment:

Bi weekly payment X 26 / 12 = equivalent monthly payment

By using this formula, you will be able to have the true fixed monthly payment, and still achieve the desired result - paying off your mortgage 7 years earlier. But if I could go one further - what if you want to payoff your mortgage even faster than that? Good news, I have compiled a spreadsheet that will allow you to compute a necessary monthly payment, based on a bi weekly payment and desired number of years. All you have to do is fill in the Input Section, and presto - you have the required monthly payment necessary to payoff that mortgage on your desired schedule. Here is a quick example:

Bi Weekly Mortgage Plan Converter
   
Input Area
Current Principle Balance Remaining $80,000.00
Interest Rate 6.500%
Desired No of Years to Payoff Remaining Balance 20
Current Bi-Weekly Payment (*PI only) $258.00
   
Automatic Calculation Area
Current Equivalent Monthly Payment (*PI only) Necessary $559.00
New Monthly Payment (*PI only) Necessary $596.46
Monthly Payment Difference $37.46
   
* Principle and Interest  
   

Feel free to leave any comments / questions below. You may download the xls spreadsheet here:

Bi Weekly Mortgage Plan Converter.xls provided by Personal Finance Resources

———————–

A debt management solution does not imply going for the best remortgages in the town. Anything but mortgages should be pursued. True, that a credit card application would take much longer, but in the end it teaches patience, and time management. Another better solution would be lender loans.


Internal Tags: 

Like this article? Subscribe to my RSS feed.

Mortgage Calculator Refinance Breakeven Point

Mortgages No Comments »

The following mortgage calculator will allow you to easily find the number of months and/or the number of years it would take to breakeven on your refinance investment (number of months and/or years at the new discounted payment to recoup the closing costs), as well as what your new mortgage payment would be.  This calculator will also provide you with the total savings you should expect over the life of the loan.  This spreadsheet tool is a must for everyone looking to refinance their home.  Let’s take a look at the following example:

Mortgage Calculator Refinance Breakeven

The values above are purely an example and for demonstrative purposes only.  Be sure to get a good faith estimate from your lender to ensure that the closing costs you think you will be paying are the actual closing costs you will be paying. A refinance tends to be much easier to acquire than a new mortgage.  Take advantage of this fact, even you have less than perfect credit, and shop around. Find a lender that doesn’t charge any points to procure the loan, and whose appraisal, survey and document fees are cheap, comparatively speaking.

The mortgage calculator refinance breakeven is in spreadsheet format and is free to download here:

 Mortgage Calculator Refinance Breakeven.xls provided by Personal Finance Resources


Internal Tags: , ,

Like this article? Subscribe to my RSS feed.

Reverse Mortgage HECM

Mortgages 2 Comments »

A Reverse Mortgage HECM, sometimes referred to as a Home Equity Conversion Mortgage (HECM), is a special type of home mortgage that lets a homeowner convert a portion of the equity in his or her home into money in their pocket. Simply put, a reverse mortgage is the exact opposite of a regular mortgage. The lender pays the borrower, and the borrower’s debt will increase as the equity in their home decreases. It allows individuals aged 62 and older to convert their home’s equity into tax free cash to help act as a second income during retirement. A reverse mortgage is a great way to tap into the equity of your home if you are not looking to sell your home and are also looking for tax free income. You may be asking yourself, just how does this work, and when will the loan need to be paid back?

Reverse Mortgage Loan Details

Reverse mortgage loans can be withdrawn in one (or more) of three options:

Read the rest of this entry »


Internal Tags: , , ,

Like this article? Subscribe to my RSS feed.

FHA Loans Information

Mortgages 1 Comment »

FHA loans were originally created for the first time home buyer as an assistance program. FHA (Federal Housing Administration) began “backing up” or insuring certain loans for mortgage companies, savings and loans institutions, banks and other lenders to convince them to lend to first time buyers. The program worked so well, that it is now widely known and available.

It is important to understand that FHA does not issue the loan itself, a typical lender actually provides the loan, FHA merely insures the loan (in part at least) against default from the borrower. Thus, if a borrower stops paying their loan, the lender has the opportunity to file a claim with FHA to recover some or all of the money. As you might guess, this made lending to first time buyers and buyers with less than perfect credit more attractive to lenders. Lenders are exposed to less risk in lending to this type of buyer, and thus approved more loans.

Although FHA provides a greater opportunity for borrowers to obtain financing, it also requires more information / documentation prior to loan approval, such as:

Read the rest of this entry »


Internal Tags: 

Like this article? Subscribe to my RSS feed.

Interest Only Mortgage vs Typical Financing

Mortgages No Comments »

An interest only mortgage can be a valuable investment tool.  However, you must be very cautious using this method.  There are many dangers surrounding the use of an interest only mortgage.  In a nutshell, an interest only mortgage is a mortgage that the borrower makes very small monthly payments (to cover interest only) and then is required to pay a fully amortizing payment at the end of the interest only option period.  Get the details on an interest only mortgage.

Typical fixed loans amortize, or pay down in increments, the principle balance of the mortgage over time.  However, paying down part of the principle balance over time increases the monthly payment.  This is the advantage of the interest only mortgage, as you only have to make small monthly payments, providing a great tool for short term real estate investments.

In my opinion, buying a house in a fast paced, quickly appreciating market is the best place for the use of an interest only mortgage.  Let’s take a look at the following *example (there will be a link at the end of the post to download the spreadsheet):

Interest Only Mortgage vs Typical Financing

Read the rest of this entry »


Internal Tags: 

Like this article? Subscribe to my RSS feed.

What is an Interest Only Mortgage?

Mortgages 1 Comment »

The interest only mortgage is a relatively new term, and not many home buyers are aware of its existence. An interest only mortgage is the only type of mortgage loan that has regular monthly payments that are only applied towards interest on the loan, and not the principal for the first years of the term of the loan. The advantage of an interest only mortgage is that your monthly payments start out considerably smaller compared to a conventional mortgage during the interest only portion of the loan. If you are wondering if an interest only mortgage is right for you, then just keep reading.

Read the rest of this entry »


Internal Tags: 

Like this article? Subscribe to my RSS feed.

5 Things You Need to Know About Adjustable Rate Mortage Loans

Mortgages No Comments »

An adjustable rate mortgage (often referred to as an ARM) is a type of loan that offers a varying rate of interest at different times during the repayment period. These rate changes often occur on an annual basis, and depend on market conditions as to whether the rate will increase or decrease. ARMs are attractive because they usually offer lower initial rates of interest than comparable fixed rate mortages. The 5 things you need to know about adjustable rate mortgages are:

Read the rest of this entry »


Internal Tags: 

Like this article? Subscribe to my RSS feed.

   Designed By:  WP Theme                                                                                           Links 2  Other Resources  Cheap Airsoft Guns  Wedding Budget  Climbing Gear
Close
E-mail It