How a Mortgage Calculator Can Save You Money

How a Mortgage Calculator Can Save You Money
I have been asked on a lot of occasions what do the mortgage calculators do? What is the difference between a mortgage calculator and a normal calculator How can you benefit from a using a mortgage calculator? Keep reading I am going to show you a secret to save a lot of money on your mortgage . .The basics you should consider . .A mortgage is a loan secured by real estate, mortgage is removed when the mortgage loan is paid off, thus freeing the property from mortgage debt The lending institute charges a fixed or variable interest rate (a percentage per annum eg 5% p a ) on the new purchase or refinance mortgage . .Most home mortgage loans in the Canada are normally amortized over a period of 25 - 35 years |Calculating amortization on a normal calculator can be discouraging A mortgage amortization calculator can calculate your monthly payments of mortgage and interest, if you know loan term, interest rate and loan amount . .The loan term can be 15, 25, 30, or 35 years, a time period required to pay off the loan Interest rate is annual cost borrowing the loan, also referred to as annual percentage rate (APR) The loan amount is amount you plan to borrow from the lender as loan . .Amortization schedule can viewed and printed on some online mortgage calculators, which is a spread sheet listing monthly or annual payments of interest and principal I promised to share a secret with you and here it is! As you may be aware, banks or lenders want to recover their interest first Therefore more goes towards to interest than to principal in the first few years of the mortgage term You may have noticed very little of the original loan amount is reduced . .The secret to saving years or decades off the mortgage term, is to reduce the principal balance of your mortgage Even by simply paying extra small amounts toward your principal each month in addition to the normal payments, you can dramatically decrease your mortgage balance This method can knock years off the your mortgage term, which means savings of thousands or even tens of thousands of dollars .
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Adjustable vs Fixed Rate Mortgages
Adjustable vs Fixed Rate Mortgages Brought to you by http://www.wolverinefinance.com Mortgage rates can either be fixed for the duration of your loan or can be adjustable. An adjustable rate mortgage is a loan that is set up with an interest rate that changes based on pre-determined criteria, primarily tied to the federal interest rate. If the interest rates are up, then your interest rate on your loan will be higher, if the interest rates are low then the interest rate on your loan will go down.Adjustable rate mortgages (ARM’s) are generally fixed interest rates for a period of time and then become adjustable. Generally speaking, the introductory interest rate for an ARM loan will be lower than a fixed rate mortgage. This is done in order to lower initial payments and allow people to take out larger mortgages, or give them smaller payments for the introductory period. This is attractive to people who may know that their income will be increasing over that period of time.Whether or not to choose an ARM or a fixed rate mortgage has been debated for as long as there have been ARM’s. Though people feel strongly in both camps, simple mathematics can assist you in determining which mortgage is best for you and your personality. Your personality? Yes. Some people are not comfortable with any uncertainty in their lives. The idea of having an uncertain mortgage payment in the future may cause them more stress than the money they are saving is worth. Therefore, factor your own comfort level into the equation.Generally speaking, ARMs are 2, 3 or 5 years, though they can be longer or shorter. At the end of that period your interest rate will become variable unless you sell your home or refinance. If you think that the likelihood of your selling or refinancing within the period of the ARM is strong, than the lower interest rates of the ARM loan will be of great benefit to you. If you think it is unlikely that you will sell or refinance within that period, then you may not benefit from an ARM.Bob and Robyn are a young married couple just starting out. Bob is in advertising sales and Robyn is a teacher. Bob is fairly confident that his income will continue to increase over the next several years as he works his way up to becoming an account executive. Robyn’s income is more predictable and is on an upward trend. Being a young couple they do not have the finances for large mortgage payments.Bob and Robyn are presented with two mortgage proposals for their $150,000 mortgage. Proposal one is a 30-year fixed rate mortgage at 6% and the other is a 5-year ARM at an introductory rate of 5.25%. The fixed rate mortgage payments would be $899.33 per month, not including taxes. The ARM would have a 5-year period where payments would be $828.31 per month, not including taxes. Bob knows that even if he can afford the extra $70.00 per month for the fixed rate mortgage, that $70 per month may be better spent knocking down principle during the ARM period. He is further confident that as his salary increases, he is likely to upgrade his home within five years or refinance to make home improvements. Bob and Robyn took the ARM loan.John and Catrina are a married couple with three grown children. John has been employed at the same company for 18 years and Catrina has been with her company for 12 years. They have consistent and stable income. Neither John nor Catrina expect any substantial increases in their salaries. After their last child moved out of the home they decided to downsize and buy a smaller home. They have a substantial down payment and will only be taking a mortgage of $100,000 on their new home. John and Catrina are presented with the same loan options as Bob and Robyn were. John and Catrina, however, know that it is unlikely they will sell or refinance in the next five years. They are comfortable with the payment schedule and, therefore, prefer the certainty of the fixed rate mortgage.There are countless websites that offer mortgage calculators to determine your mortgage payment. For your convenience we offer one on our site. You can review the different payment schedules based on the interest rates quoted for the fixed-rate and the ARM. Once you know the different payment amounts you will be able to determine which loan makes the most sense for you and your unique circumstances.Your mortgage professional should also be able to assist you in reviewing the options and making the best decision for you. The more open and honest you are with your mortgage professional the more helpful they will be. It is only if they are armed with full and honest information that they will be able to make recommendations to you. About the Author: Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.wolverinefinance.com For Credit Repair Software, other products, ebooks & articles, visit http://www.globalbizwiz.com I own a mortgage company and want to keep people in the know! I also have a For Sale By Owner website where you can post your home for free. www.MyUglyYellowSign.com By the way…Keep your credit clean…You'll always pay more if your credit is poor!
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Finding the Lowest Refinance Mortgage Interest Rate
Does Refinancing Right Now Make Financial Sense? . .A lot of Americans are excited since President Obama passed his “Making Home Affordable” plan as part of the economic stimulus package The requirement that lending institutions offer a 2% interest rate to those hit hardest by the failing economy and a loss of income is indeed something to get excited about But do you qualify for it? . .The fact is that you must be eligible for this great low rate Your mortgage payments must be current and you cannot have fallen past due for more than 30 days in any month from the previous twelve The payment for your mortgage needs to be 31% of your monthly income or higher, and you need to prove your financial hardship If your mortgage was written by either Freddie Mac or Fannie Mae, you are also eligible for refinancing at the 2% rate . .If none of the above applies to you, then you must refinance at the prevailing rate offered by the lender Sometimes the difference is not great enough to make good financial sense Consider finding an online mortgage payment calculator as a way to help you decide . .You will find lots of them available on the internet Before your new payment can be calculated, you will need to know how much you still owe on your current loan, the length of the mortgage, and the interest rate charged You will need the new interest rate, as well . .Bear in mind that this figure will not be totally accurate unless you know the amount of any fees or points that must be paid to refinance Even without these figures, however, the online calculator will give you a good indication if refinancing is even a viable option in your circumstances . .Plan to Find the Lowest Mortgage Refinance Interest Rate . .Finding the lowest mortgage refinance interest rate is going to require a bit of effort on your part You may want to subscribe to an online service that alerts you of overnight rate changes When the mortgage interest rate gets down to an acceptable low, then you will have to act fast to ensure it is locked in on your loan . .The prevailing mortgage rates can fluctuate quite a bit This is based more on supply and demand than it is on the prime rate If demand is low, so will interest rates decrease, and vice versa . .Consider the Federal Reserve’s role in changing the mortgage interest rate The prime rate is often lowered in order to stimulate a sluggish economy The expectation is that borrowing, and spending, will increase Vendors know that this is the time to raise the prices on goods As inflation occurs, mortgage bond values decrease Mortgage lenders, then, raise their rates to cover the loss . .There is a lot to be aware of when seeking the lowest possible refinance mortgage interest rate Most homeowners do not have the time or skill to do so You may prefer to work with a reputable company that can find the best loan product for you, and let you know as soon as the interest rate becomes low enough to make refinancing worthwhile .
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