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Free Online Calculators Help Determine Mortgage Payments

The slump in the real estate market has made homes more affordable, yet many people are struggling to maintain their current mortgage payments. As a result, homeowners now have several different options to assist them with making their mortgage payments. Under certain conditions a person can refinance, reducing their monthly payments to a manageable amount.

If you are a homeowner wanting investigate your refinancing options, you will benefit from using free online calculators before you contact your mortgage company. These scientific calculators will give you a snapshot of what you can expect to pay based on a number of different factors, including the interest rate, monthly payment amount and the number of payments required to pay off the loan.

One payment structure that is different from other loans is the amortization loan. Amortized loan payments have a fixed interest rate. You can use free online calculators at different real estate and mortgage lender web sites to determine whether or not you can afford these types of payments. These payments are calculated by dividing the principal amount of the loan by the number of months agreed upon for repayment.

So, if you wanted to get a 30 year fixed mortgage loan, you would have 360 months to repay the loan. The interest is added to the principal amount, and each payment is applied to the interest first, then to the principal amount. If you send an additional amount with your payment, you must tell your mortgage company to apply the extra amount to the principal. This will help you save money long-term and reduce the life of the loan. Otherwise, it will take some time before the interest and principal payment amounts equalize with an amortized loan structure.

By: Mike Trump

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Posted in Real Estate · July 28th, 2010 · Comments (0)

Can I Get Approved For a Home Equity Loan?

Getting approved for a home equity loan is very similar to getting approved for a mortgage. You’ll have to go through the same process as you would with a mortgage loan and you’re offered the same types of interest rates. The problem with a home equity loan is that the banks always changed the way they lend the money out.

When real estate was booming it was easy to loan out money because the worth of the home was increased by 5% or 10% over the next year. So the bank would loan out more than people could afford because there was no downfall for the bank.

Let’s say you buy a home for $200,000 and your loan is for 100% of that so you owe the bank $200,000. Well if you stop paying your mortgage the bank will foreclose on your and sell the home to get their money back. So even if they sell it for $200,000 then they have to pay real estate fees of 5% which is $10,000. So the bank lost $10,000.

Now let’s assume you owe the bank $180,000 of the $200,000. Well 2 years ago the bank would loan you a 110% home equity loan which is an additional $40,000 on the $180,000. So now you have a $220,000 mortgage loan on a $200,000 home. The bank was gambling the fact that you’ll pay your mortgage on time for at least a year and they’ll get their money back. Well that’s when the market crashed and the $200,000 sunk to $160,000 and the loan is still for $220,000 so the banks took a huge hit!

So I recommend using a free mortgage calculator to figure out how much you can actually afford and go with that number as long as the bank approves you for it. As long as you keep making your monthly mortgage payment on time then the bank won’t have any reason to foreclose on your mortgage.

Now that the banks had that big issue and lost a lot of money they will only allow 80% home equity loans. That means if you have a $200,000 home you can get up to $160,000 worth. That means you have to owe less than $160,000 to the bank and then you can get up to the $160,000 for a loan. The reason is for the market going down so quickly the bank wants to save themselves if anything should happen.

Make sure to use an interest calculator before buying a home or getting a home equity loan. The interest rates make a big difference and you should stay on top of them to make sure you get the lowest monthly mortgage payment.

By: Chris G Bell

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Posted in Real Estate · March 2nd, 2010 · Comments (0)

All About Useful Amortizations

Applying for a loan can be a daunting task for a consumer. Everyone worries about the prime lending rate, loan terms and such. So it is important to know a little about how these things are calculated.

An amortization table is exactly what you need to look at before you take out any loan. Ask your lender to show you one prior to the signing.

An amortization schedule is a report that spells out in detail the effects of each payment on a loan throughout the life of that loan. This is typical of a mortgage loan since they are long term at 25 to 40 years, but can be used on any type of loan. Car loans, personal loans and student loans can all be reviewed using an amortization schedule.

Every loan is split into two pieces: the principal (what you are borrowing) and the interest (what you pay for the loan). An amortization table breaks down each payment and tells you how much of your payment is going to interest and how much goes towards paying down the principal.

At the beginning of the loan, a large part of the payment goes towards interest with very little going to the principal pay down. The amount going to the principal increases as the term progress Usually, the final payment is somewhat lower than the previous ones.

Additionally, the amortization chart shows interest paid to date, principal paid to date and principal remaining after each payment.

As you can already see, this is a valuable tool for the savvy consumer to properly decide on the right loan deal.

The formula is very involved and looks like this where P=Payment, I=interest and n=number of payments:

P= I x principal x (1+I) x n / (1 + I) x n

You could try that for your self or just use one of the many free amortization calculators like the one at http://www.amortization-calc.com/.

Aside from getting this information from a lender, there are quite a few companies that sell amortization software like Slateboard’s Quick Calc Pro Amortization software. See it at http://www.slateboard.com/pro_quikcalcpro.htm

With the software in hand, you could easily preview the financial impact of any loan you are considering. Look for the best rate, put it into the calculator and figure exactly what the payments will be for a given term.

This is especially useful when considering a re-finance or re-mortgaging. What happens is that all of the interest paid on the original loan is lost. The re-finance stars the process all over again.

There are also several different types of amortization schedules including linear, declining balance, annuity, bullet (all at one time) and increasing balance (negative amortization). Of these, the most common one is linear.

Almost any financial web site has calculators available freely. Simply Google “amortization calculators” and you will see a plethora of free ones to choose from. Software like that mentioned above is also available openly either at your favorite software store or online. Again, just Google “amortization software”.

A little knowledge goes a long way and using an amortization schedule is good preparation and even better foreknowledge.

By: Rita Lambros-Segur

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Posted in Real Estate · July 6th, 2007 · Comments (0)

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