Financial Calculators

How much mortgage might I qualify for?

2008-04-11T15:40:00.000-07:00

Most lenders base their home loan qualification on both your total monthly gross income and your monthly expenses. These monthly expenses include property taxes, PMI, association dues, insurance, and credit card payments.

Note...

This calculator should be used for estimation purposes only.

Check out the Results...

You'll see multiple results based on credit ratings. If your credit is OK, a mortgage originator may supply a loan where the payments add up to 28% of your gross income or 36% of your gross income less fixed monthly expenses. However if your credit is exceptional, a lender may be willing to increase the allowable mortgage payment. These days, these deals are getting harder to come by.

Tips for the astute...

Consider paying off a car or other fixed debt expenses with a portion of your down payment. See how it affects the results. Sometimes, you're better off paying outstanding loans rather than increasing your down payment. These days, buyers are finding that they need to be as close to debt free as possible and still have a decent down payment.

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How much mortgage might I qualify for?

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How much will I save by increasing my mortgage payment?

2008-03-28T10:34:00.000-07:00

Many of us dream of retiring debt free with a nest egg large enough to sustain us in retirement. Often, this dream involves paying off a home mortgage.

Find out how much interest you can save by paying an additional amount with your mortgage payment. The additional amount will reduce the principal on your mortgage. It will also reduce the total amount of interest that you will pay over the life of the loan. And last, but not least, even small amounts contributed regularly can substantially reduce the "life of the loan" (number of payments you will need to make).

Be sure to look at the payment schedule...

You'll need to check the "Show payment schedule" box and hit "Calculate" to see it. The payment schedule breaks your payment into principle and interest amounts. The number of payments decreases as your addional payment amount increases.

Check out the Results...

The bold answer shows how much earlier you'll pay off that mortgage. It also shows you how much you'll save in interest by paying the mortgage off earlier.

Tips for the astute...

Play with a variety of different numbers. When you apply an additional amount monthly, you may be suprised at how little it takes to make big changes. Not only is the additional amount that you pay important, but also the frequency at which you pay the amount. The magic of compounding makes $100 per month greater than $1200 per year.

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Which mortgage is better for me?

2008-03-20T11:16:00.000-07:00

Once you've found the perfect home, you need the perfect mortgage loan to pay for it. You probably have an idea of what you want already: the lowest interest rate and smallest monthly payment possible. Yet these days, there are so many options to consider when shopping for loans. Every loan offer will have its own "terms", "points", "fees", "rate(s)". Are you considering a fixed payment loan, or possibly an adjustable payment loan? If adjustable, are you interested in a 3/1, 5/1, or something else entirely? And how do you know what that teaser rate is really worth?

This calculator will help you compare the total cost of any two or three mortgages. This analysis includes the effect of a tax deduction for interest. If the interest is not deductible, or if you do not want to show the effect of the tax deduction, choose an income tax rate of zero.

Look in the chart for a play by play of of your tax savings...

Be sure to check the "Tax Savings vs Term chart" checkbox. You'll see multiple loan lines on the chart. Each line tracks the tax savings over the term for that loan. If you provide names for your loans in the input area, then the chart will reflect these names.

Notice the financial details section...

This is where you will find the APR of various loans entered. The annual percentage rate (APR) is the standardized (and regulated) way to express your loan rate. The APR takes one-time fees (like origination fees and points) and rolls them up into the loan expressing the result as an overall rate. This really helps when comparison shopping for loans.

Another aid in the comparison is the "Present value of the loan". This tells you how much all the payments are worth in today's dollars. That way inflation doesn't get in the way of comparing loans. Weigh all this information and be sure to read your loan documents.

It's tough to find one loan that fits everyones objectives. But this tool makes it easier to find the right loan for you.

Tips for the astute...

Your tax rate is used to calculate the monthly advantage of your interest deduction. If you wish not to include the interest deduction advantage, you may set your tax rate to 0. Please keep in mind that your tax deduction may be limited beyond the scope of this calculator. Talk to your tax advisor before using these results in your specific situation.

Your investment rate of return is used to compare the difference between investing in a house and investing elsewhere (e.g., like your savings account). This helps us keep the comparison of a wide array of loans fair using the "Present value of the loan".

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Should I rent or buy?

2008-03-10T07:10:00.000-07:00

Homes aren't selling at the pace they were just last year. With the value of the dollar dropping, the values of home dropping even more, the rates sliding downward, but loans harder to find, and job growth slowing... Well? You may wonder if it's time to get off the fence and buy a home. This calculator compares the cost of renting versus the cost of buying a home.

Home purchase is potentially the greatest investment you will make in your lifetime. This calculator considers only the financial benefits of renting vs buying. Home ownership has other benefits as well. Please consider all the factors when making your final decision.

Look in the chart for a break-even...

Be sure to check the "Show gain vs term chart" checkbox. You'll see two lines on the chart. The red line represents the rental and the green line represents the purchase. Gain is how much money you have at the end if you sell (the house). In the rental case, you'll notice that you loose the opportunity to gain based on home appreciation. However, in a deflating market your rental gain can outpace your purchase gain if your down payment is well invested.

Either way it costs more up front to buy a home since you'll need to put forth a down payment. If you plan to stay in the property for a while, you might find that the green line crosses the red. That is, your purchase gain outpaces your rental gain. This is called the break-even point. In 2005 and 2006, your break-even point often happened within six months. Now in 2008, you may find that it takes longer (possibly years).

So your left in the end with patience. Patience waiting for the prices to bottom out, or patience waiting for the home you purchased to once again appreciate. Keep in mind that real estate is locally driven. In one town, prices may be falling. Simultaneously, prices may rise elsewhere.

One more thought; when buying a home, be sure to check out the local school. http://www.greatschools.net/ is a great place to start your search. Sites like this have a wealth of information about the community - even if you don't have school aged children.

Tips for the astute...

Your tax rate is used to calculate the monthly advantage of your interest deduction. If you wish not to include the interest deduction advantage, you may set your tax rate to 0. Please keep in mind that your tax deduction may be limited beyond the scope of this calculator. Talk to your tax advisor before using these results in your specific situation.

Your investment rate of return is used to compare the difference between investing in a house and investing elsewhere (e.g., like your savings account).

Tax on your yield in equity is not taken into account. Talk to your tax advisor if you think you may be subject to this tax.

This calculator does not consider the potential benefits of accepting the standard rent credit or the standard deduction when comparing the tax savings of renting versus buying a home. The decision to itemize or accept the standard deduction is beyond the scope of this calculator.
"Cost for purchase and sale of home" includes agent commission for selling as well as closing costs, points, and fees for buying.

This calculator assumes that the difference between the monthly rent payment and the monthly mortgage payment is not invested.

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How much will my payments be for a balloon mortgage?

2008-03-06T15:26:00.000-08:00

This calculator computes the payment amount necessary for a mortgage with a balloon payment, using monthly interest compounding and monthly payments. The term of a balloon mortgage is usually short (e.g., 5 years), but the payment amount is amortized over a longer term (e.g., 30 years). An advantage of these loans is that they often have a lower interest rate, but the final balloon payment is usually substantial.

Balloon payment mortgages are more common in commercial real estate than in residential real estate. The 7-year Fannie Mae Balloon is an example of a balloon payment mortgage which features monthly payments based on a 30-year amortization. At the end of 7 years you pay the remaining balance or refinance.

Take a look at the payment schedule...

You'll need to check the "Show payment schedule" box and hit "Calculate" to see it. The payment schedule breaks your payment into principle and interest amounts. Notice how the payment is fixed untill the balloon payment is reached. This fixed amount is based on the "Amortized over" value that you provide (e.g., 30 years). The balloon amount is the remaining balance after the regular payments have been made.

Check out the Financial Details...

The results will display your monthly payment amount and your balloon payment amount separately in bold. Then the financial details gives you a summary of the financial information you provided.

Tips for the astute...

If you are looking at balloon payments in the US, keep in mind that the balloon payment must be stated in the contract if Truth-in-Lending provisions apply to the loan.

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How much will my adjustable rate mortgage payments be?

2008-02-13T08:04:00.000-08:00

This calculator computes the estimated payments and interest for an adjustable rate loan, where the rate increases by the maximum amount allowed at each interval until it reaches the rate cap.

An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note (or contract to pay) is periodically adjusted based on a variety of indexes. Some of the most common indexes are the London Interbank Offered Rate (LIBOR), the Cost of Funds Index (COFI), and the 1-year constant-maturity Treasury (CMT) securities. This method of adjusting the rate ensures a steady margin for the lender whose own cost of funding is related to an index.

The borrower often starts with a low introductory (or teaser) rate scheduled to reset in 1, 3, or 5 years. At the end of this introductory term, the borrower benefits if the index falls. This reduces payments. However, an increase in the index can significantly increase the payments. In some mortgages this can lead to payment shock where the payment significantly increases in a short period of time.

Be sure to look at the payment schedule...

You'll need to check the "Show payment schedule" box and hit "Calculate" to see it. The payment schedule breaks your payment into principle and interest amounts. Notice how the payment adjusts over the life of the loan. This calculation shows a worst case senario where the interest increases by the maximum amount allowed at each scheduled interval until the rate cap is reached.

Check out the Financial Details...
The bold answer is nice, but the table below it lists the details.

Tips for the astute...

The APR calculation in this calculator does not include the effects of points, fees, or private mortage insurance (PMI).

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How much will my fixed rate mortgage payment be?

2008-02-12T08:33:00.000-08:00

This calculator computes the payments (principal and interest) for a fixed rate mortgage, using monthly interest compounding and monthly payments. A fixed rate mortgage (FRM) is a mortgage loan where the interest rate on the note (or contract to pay) remains the same through the term of the loan. This is in contrast to adjustable loans where the interest rate may adjust or "float."

Be sure to look at the payment schedule...

You'll need to check the "Show payment schedule" box and hit "Calculate" to see it. The payment schedule breaks your payment into principle and interest amounts. Notice how the payment stays fixed but the interest portion gradually reduces over the life of the loan. This affects your taxes if you deduct interest on your residence. Also note how the amount of your payment allocated to principle increases over the life of the loan. This pays down the balance of the loan.

Check out the Financial Details...

The bold answer is nice, but the table below it lists the details.

Tips for the astute...

Your payment amount includes principal and interest. It does not include property tax, association dues, private mortgage insurance, and other insurance or costs. These other bills can really add up. Be sure to read your loan documents, insurance documents, and tax documents. Some insurance you pay for yourself (e.g., homeowners insurance). Other insurance you pay on behalf of the bank (e.g., PMI or private mortgage insurance). PMI usually comes into play when you put less than 20% down on a home. Some banks require that all these costs be held in escrow (or impound). This satisfies the bank that everyone is paid on time, that your home is insured, and that taxes aren't overdue.

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Should I refinance?

2008-02-11T14:34:00.000-08:00

When you refinance at a lower interest rate, you usually pay refinancing costs including points, fees, and closing costs. This calculator will tell you if the amount you save in interest will exceed these refinancing costs. The calculated results depend on how long you plan to keep this property. Your income tax is used to compute any tax advantage/disadvantage to the refinance. Even your "oportunity cost" for cash out-of-pocket is figured using your savings rate. Remember, if you choose not to refinance then you could be earning interest on the fees you would have paid. This helps keep the refinance comparison fair.

Be sure to look at the Chart...

You'll need to check the "Chart" box and hit "Calculate" to see it. Pay particular attention to the chart's "Break Even Point". This is where the cost to refinance matches what you've saved in interest (for refinancing at a lower rate). If you'll never recoup your losses, this line may not appear.

Check out the Financial Details...

The bold answer is nice, but the table below it lists the details.

Tips for the astute...

In this analysis, cash out is not considered as part of the cost of the loan since the cash could theoretically be put back into the loan.

Your tax rate is used to calculate the monthly advantage of your interest deduction. If you wish not to include the interest deduction advantage, you may set your tax rate to 0. Please keep in mind that your tax deduction may be limited beyond the scope of this calculator. Talk to your tax advisor before using these results in your specific situation.

The total loan cost figure is actually the present value of all the payments for as long as you keep this property, using the investment rate of return as a discount rate. You may also think of it as the amount you would have to invest today (e.g., in a savings account) to cover all the payments for as long as you keep this property. Negative savings are indicated by brackets.

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