80 20 Mortgage Loan
The price of homes is steadily climbing. In order to buy a home, borrowers are turning increasingly to 100-percent financing and home loans where mortgage insurance is not part of the deal.
The 80 20 mortgage loan is one such loan. With an 80 20 mortgage loan, the home buyer actually takes out two loans. The first part of an 80 20 mortgage loan is for 80 percent of the purchase price. At the second part of an 80 20 mortgage loan is for 20 percent of the home’s price. The closing costs of an 80 20 mortgage loan are something that the buyer is expected to come up.
According to Anthony Hsieh, president of HomeLoanCenter.com, an 80 20 mortgage loan “allows people to buy without a down payment.” An 80 20 mortgage loan is also for people who would rather leave their savings alone in buying a house.
Most people who take on an 80 20 mortgage loans are usually young professionals. Hsieh further describe that these are “people who have gotten out of college and have good jobs.” An 80 20 mortgage loan is for people who have good credit but do not have a lot of savings to their name in order to afford down payments of most homes.
80 20 Mortgage Loans for Renters
80 20 mortgage loans are also targeted to those people who are renters or renting apartments. These types of people can afford monthly rents, the costs of which are roughly about the same as the cost of a home. Because their rent costs are a cycle, at the end of their monthly bills, these people do not have enough funds saved to be able to afford a down payment.
These people may be able to borrow money on loan programs where little or no down payment is required. But to do so, they would have to provide a private mortgage insurance or PMI. If you want to avoid PMI, you can take an 80 20 mortgage loan.
With an 80 20 mortgage loan, you get a “piggyback loan” or second mortgage loan that is used to back up the first mortgage. The first mortgage is comprised of 80 percent of the home’s price. The second loan is only for 20 percent minus the down payment.
80 20 Mortgage Loans – Second Mortgage spells higher rates
In most cases, the interest rate of the second loan of an 80 20 mortgage loan is higher that first. However, if you combine the two payments in an 80 20 mortgage loan, you get lower costs.
You can see evidence of this just by comparing the cost of an 80 20 mortgage loan with the cost of a regular loan with PMI. The 80 20 mortgage loan usually costs less each month.
80 20 mortgage loans are structured by lenders in several ways. Some lending companies structure their 80 20 mortgage loan with the first loan having a 5/1 ARM payment. This means that the 80 20 mortgage loan has a fixed rate for the first five years. However after the initial five years, the payment for the 80 20 mortgage loan interest rates is adjusted annually.
Others structure their 80 20 mortgage loans in a slight different way. 80 20 mortgage loans have the 20 percent piggyback dependent on the prime rate. The 80 percent of the 80 20 mortgage loan can be a fixed rate, adjustable, or interest-only.
Second Mortgage Loan
A second mortgage loan is a subsequent loan and subordinate to the earlier mortgage. In other words, a second mortgage loan is used as collateral pledged for the first loan.
Length of Second Mortgage Loans
Second mortgage loans have varying lengths with which they are eventually paid off. Some second mortgage loans may last for as long as 15 or 20 years. Other second mortgage loans only require one year for repayment.
When you’re thinking of taking on a second mortgage loan, you will need to know what term best suits you. Discuss the repayment terms of the second mortgage loan with your bank or lending company. For instance, you get a second mortgage loan worth $20,000 to make some home repairs. With this amount, you might want to take on a second mortgage loan that will allow you to repay the entire amount in one or two years. If you pay a second mortgage loan that has a shorter term, the monthly payments may be too high.
Payment Calculations for Second Mortgage Loans
Before taking on second mortgage loan, be sure that you understand a couple of things first. Know how much your monthly payments will be for that second mortgage loan. Moreover, it is also helpful if you also have an idea as to where those second mortgage loan payments will cover.
Some second mortgage loans require you to make monthly payments on both interest and principal. Other second mortgage loans only require you to pay the interest of the borrowed amount.
The former type of second mortgage loans will allow you to significantly shorten your payoff period since with each payment you make, you are also chipping away at the principal. With the interest-only second mortgage loan however you will be required to pay back the entire amount that you borrowed as soon as the term ends. This type of second mortgage loan is also called balloon payment loans.
Second Mortgage Loan Costs
Fees may be charged by some lending companies for the money you borrow on second mortgage loans. The fees, referred to as “points,” are usually a percentage of the second mortgage loan. One point on your second mortgage loan is equivalent to one percent of the amount you borrow.
So, if you were to get a second mortgage loan of $10,000 with an eight-point fee, then you would have to pay $800 in “points.” Second mortgage loan companies may charge you in varying number of points so if it might be helpful if you do a comparison first.
Second Mortgage Loan Rates
Second mortgage loans have different payments plans. Most second mortgage loans have a fixed rate payment included in their payment plans. If you have a fixed rate second mortgage loan, the interest rate will be set for the whole loan term. This means that your monthly payments for your second mortgage loan will not be affected by any outside changes.
Some companies also offer second mortgage loans with variable rate payments. These variable rate second mortgage loans periodically experience rate adjustments. A variable rate second mortgage loan might be cheaper than a fixed rate payment in the long run. But this is only provided if the interest rates of second mortgage loans go down. If interest rates rise, then your monthly payments for your second mortgage loan will rise as well.
Real Estate Tax Mortgage Calculators
Today, the asking price of most properties is quite large and usually beyond the normal means of the consumer. This is why a lot of people apply for a loan in order to acquire property.
To pre-qualify yourself for such a loan, you would need the help of a real estate tax mortgage calculator. A real estate tax mortgage calculator can calculate a number of things that pertain to mortgages. One of the first things that real estate tax mortgage calculators do is to see if you pre-qualify for a mortgage.
A real estate tax mortgage calculator would need some information from you. Before starting the pre-qualifying process you would have to provide the real estate tax mortgage calculator with your gross pre-tax income, total monthly debts, loan amount, loan interest rate, and loan term. The real estate tax mortgage calculators need all these information so that it can gauge the loan against your personal income. This method of assessment used by real estate tax mortgage calculators is also the method used by banks and other lending companies so you can be assured that the information you get from a real estate tax mortgage calculator is accurate.
After putting in all the relevant information, the real estate tax mortgage calculator will tell you if you passed the pre-qualification by giving a yes/no answer. If the real estate tax mortgage calculator says “Yes,” this means that you have met the income requirements for that mortgage.
However, if the real estate tax mortgage calculator tells you “No,” then it means that you were unable to make it to the income cut off. Along with the pre-qualifying test results, the real estate tax mortgage calculator will also show you the minimum income requirement in order for you to qualify. Real estate tax mortgage calculator therefore also gives you an idea on how much you need to earn in order to re-apply for the loan.
After determining that you pre-qualify for the mortgage using the real estate tax mortgage calculator, it is now time for you to contact the bank or lending company. Before signing in for a mortgage though, make sure that you know what Principal, Interest, Taxes, and Insurance are involved. These data are made available to you using a real estate tax mortgage calculator.
A real estate tax mortgage calculator will help you know the value of the mortgage in dollars. Repayments for mortgages can also be determined using a real estate tax mortgage calculator. If you want to know how many repayments there would be, you can also use a real estate tax mortgage calculator for that. A real estate tax mortgage calculator can also help you estimate when you will be able to pay off the balance in full. Whether your are late in making repayments or do it in advance, a real estate tax mortgage calculator will help you determine the circumstances.
Because a real estate tax mortgage calculator can answer those questions and more, you can then give yourself the opportunity to accurately evaluate the mortgage offered and see if you can afford the payments.
Balloon Payment Mortgage
The other term for a balloon payment mortgage is a partially amortized loan. Balloon payment mortgage is when your liability or obligation is only partially amortized, leaving the rest to be paid upon the completion of the term. Because the initial interest rates and monthly payments are lower, a balloon payment mortgage is paid off with one large payment at the end of the loan term.
Balloon payment mortgages are called such because borrowers who are on this type of loan are usually set up for a “balloon” payment at the end of their loan term. In most other loans, monthly payments do not only pay off the interest but also chip away at the principal amount – the original amount owed. Thus at the end of each loan term where balloon payment mortgage is applied, no money is owed.
With balloon payment mortgages however, the monthly payment only comprises of interest or a combination of interest plus a small amount for the principal. No matter the case, when the balloon payment mortgage term expires, the balance is due in full.
Most second mortgages are commonly balloon payment mortgages. For instance, your balloon payment mortgage is $20,000 with a monthly interest-only payment set up for ten years. When your balloon payment mortgage term ends, you still have to pay for the $20,000 principal amount.
There are a couple of accepted institutional loan products that have balloon payment mortgages. One of these balloon payment mortgage products is the 30-year loan that has to be paid off in five or seven years.
Usually, the interest rate of the 30-year balloon payment mortgage is lower than a normal 30-year fixed rate mortgage with due date of 30 years. Monthly payments of balloon payment mortgage are still amortized based on the 30-year term. But at the end of five or seven years, a large amount of the balloon payment mortgage is due.
To explain further on this, let’s say you have a balloon payment mortgage with an interest rate of 7.5%. After seven years, an approximate 92% of the original balloon payment mortgage amount is due. For example, the amount of the balloon payment mortgage is $200,000. The interest rate for this balloon payment mortgage is 7.5%. After seven years, the total amount of money you owe to the balloon payment mortgage lender is $184,000, provided that you haven’t sold the property yet or refinanced.
A tip for home borrowers is that when you do take on a balloon payment mortgage makes sure that the due date is not too soon. With balloon payment mortgages, if you can’t pay the lender the amount on the due date, you might have to foreclose and lose the property.
Some lenders offer extensions for their 30-years-due-in-7 balloon payment mortgages. Lenders of this type of loan may extend your balloon payment mortgage for another 23 years but with a new interest rate. These balloon payment lenders base their new interest rates on a conversion formula. In this case, you might have to re-qualify for the balloon payment mortgage should the new interest rate on the mortgage being converted is significantly higher than the old rate.
Amortization Mortgage
What is an amortization mortgage? If you’ve bought a house before, you probably have an idea what amortization mortgage is. But as far as details are concerned, amortization mortgages just escape those who don’t have a solid financial education background.
Amortization Mortgages: What the experts say
According to Philip Russel, assistant professor of finance at Philadelphia University, an amortization mortgage is “the systemic payment plan – such as a monthly payment – so that your loan is paid off over the specified loan period.”
Based on his given definition, we can therefore safely conclude that an amortization mortgage is an amount of money that is to be paid off by a certain date. Paying off an amortization mortgage is usually done in equal monthly installments. One example of an amortization mortgage is one that involves your car loan or your home loan. Your credit account however cannot be considered an amortization mortgage since it does not involve a fixed date for payoff.
In an amortization mortgage, payment is divided into two portions – one for the interest cost and the other for the principal amount. The principal amount is the money originally borrowed from the amortization mortgage lender. The interest is the percent growth of the money as time goes.
Amortization mortgage interest is computed based on the current amount owed. Thus the longer you’ve been paying for an amortization mortgage, the lower the interest becomes.
Negative Amortization Mortgage: Pros and Cons
Payment plans for an amortization mortgage are usually based on adjustable rate payment loans. Adjustable rate amortization mortgages are loans where the amount you pay depends on the rise or fall of interest rates.
Some types of adjustable rate amortization mortgages offer payment caps than interest rate caps. This basically limits the increase amount of your monthly payment on your amortization mortgage and makes your loan negatively amortized. If interest rates rise to the point that the interest due cannot be covered by your monthly amortization mortgage payment, the unpaid amount will be added into the loan balance, increasing it over time.
For instance, the payment cap of your amortization mortgage is 7.5%. With a monthly amortization mortgage payment of $1,000 and rising interest rates, your new payment would normally be $1200/month. But with an amortization mortgage with capped payment, you would only be paying $1075 and the other $125 gets added to your loan balance.
But this setback of a negative amortization mortgage can be counteracted if you choose to pay the additional amount now and not wait for its payoff overtime. Another advantage of negative amortization mortgages is that cash flow is more easily controlled. Remember that with an adjustable rate amortization mortgage, interest rates may go lower depending on the market. Natural inflation will allow you to pay back the money you borrowed today at a depreciated value years from now.
Most adjustable rate amortization mortgages have interest rates that will adjust every six months, once a year, every three years, or every five years. Interest rates of negative amortization mortgages can adjust monthly.
Free Mortgage Loan Calculator
There are as many uses for free mortgage loan calculators as there are as many free mortgage loan calculators available online. Here is a collection of these free mortgage loan calculators and how you can use them to help you with your mortgage scenario.
Free Mortgage Loan Calculator – Amortization
Free mortgage loan calculators will help you determine your amortization schedule. Whether or not your amortization schedule is based on prepayments, free mortgage loan calculators will help you compute the amount of a monthly payment.
Free mortgage loan calculators help determine this by basing its functions on such important data as principal amount borrowed, loan term, and the annual interest rate. Once the free mortgage loan calculator computes your monthly payment based on the data given, you can then click on the button that would allow you to create the amortization schedule report.
Free Mortgage Loan Calculator – Bi-Weekly Mortgage
Free mortgage loan calculators also help you with your bi-weekly mortgage calculations. A free mortgage loan calculator will show you what the amount of payments will be. Aside from that, a free mortgage loan calculator will also help you calculate your savings in lowered interest costs.
To calculate your bi-weekly payments, total interest, and average interest each bi-weekly period, you will need to provide the free mortgage loan calculator with the principal loan balance. Along with that, input the annual interest rate and amortization length into the free mortgage loan calculator. Once you have all these accounted for, just click on the button below the free mortgage loan calculator so you can start computing your savings on interest and monthly payments.
Free Mortgage Loan Calculator – Scenarios
An interesting function of free mortgage loan calculators is that they would be able to let you play mortgage scenarios to help you determine the outcome. Find out how your down payments can affect your monthly loan payments with a free mortgage loan calculator.
Free Mortgage Loan Calculator – Monthly Payments
One of the main functions that all free mortgage loan calculators have is its ability to calculate monthly mortgage payments. The information that you need to put into the free mortgage loan calculator would be the mortgage amount and mortgage term. The free mortgage loan calculator would also need data on interest rate and mortgage start date. By clicking on the calculate option at the bottom of the free mortgage loan calculator, you can easily see how much your monthly payment will be with that type of mortgage.
Some free mortgage loan calculators have a special widget that will also help you calculate the impact of making extra payments on your mortgage. By either placing the additional amount for monthly, yearly, or as a one-time payment on to the free mortgage loan calculator, you can find out when your paid-off date will be.
Free Mortgage Loan Calculator – Missing Variable
With free mortgage loan calculators, you can find out exactly what your monthly payment will be and how much savings you can make. But aside from that, free mortgage loan calculators can also help you find out what are the missing variables of a loan. For instance, if you’re thinking of buying a home, find out how much money you would have to earn in order to afford one. With free mortgage loan calculators, this task is made easy for you.
There are several free mortgage loan calculators out there, each equipped with different functions. All you need is a little exploring to find the right one and make the right mortgage decision.
Free Online Mortgage Calculator
When looking for a mortgage, the first thing you do is finding out what mortgage is best for you. The money market is offering you many choices for this. Are you for fixed rate mortgages? How about adjustable rate mortgages? You can have any of these mortgage choices and once you’ve chosen, the next step would be to use mortgage calculators.
Mortgage calculators will help you determine how much you can afford for a mortgage. They will also help you find out what are the monthly payments involved. Because of the significance of mortgage calculators in helping consumers make a choice, several free online mortgage calculators have been steadily cropping up in the Internet.
Free online mortgage calculators because consumers do not spend a single dime on them. Free online mortgage calculators are quick and easy to access. Aside from that, free online mortgage calculators are relatively simple to use. So consumers who wish to find out more about a certain mortgage, using free online mortgage calculators is a step in the right direction.
Free online mortgage calculators have other uses besides those mentioned above. Free online mortgage calculators can be used to evaluate the amount of payments on debt consolidation mortgage loan. Seeing how much your monthly savings would be in a loan can be achieved using free online mortgage calculators.
Refinancing has never been this easy if you use a free online mortgage calculator. Find out how much you can afford to borrow on a new loan and compare the difference using a free online mortgage calculator. Estimate your repayments through a free online mortgage calculator using time scales and interest rates.
The factors involved in getting a loan are numerous. With free online mortgage calculators, you give yourself the guarantee that you are getting the accurate monthly payment figure. Also, with free online mortgage calculators, you can account for all the factors involved in determining the right mortgage for you.
Free online mortgage calculators include a function to help you with your amortization schedule. This function of a free online mortgage calculator will help you find a payment plan that will enable you to make monthly payments on your principal. In this way, free online mortgage calculators can help you gradually reduce your debt at a duration you can accurately determine.
Sites with Free Online Mortgage Calculators
The Internet has several sites that include free online mortgage calculators among their many features. Here are some of them.
Interest.com - This site features a free online mortgage calculator that will help you answer all the questions you will be asking when shopping for a loan. How much will the monthly payment be? How much can I afford to borrow? These are only a couple of questions that the Interest.com free online mortgage calculator will be able to answer.
MortgageMath.com – This website provides a source for free online mortgage calculators. Some of their free online mortgage calculators include: Simple Mortgage Calculator, Rent vs. Buy Calculator, Financial Calculators, and Amortization Calculators.
Bankrate.com – This site offers a free online mortgage calculator that is fast and easy to use. Their free online mortgage calculator also lets you view your amortization schedules and prepayment savings.
Mortgage Rate Comparison
When you’re in the market for a loan, it might do you good if you do a little mortgage rate comparison. With mortgage rate comparisons, you are sure to make the right decision and choose the right mortgage.
FSA Key Facts – Mortgage Rate Comparison Tables
FSA or Financial Services Authority is a mortgage and insurance regulation board based in the United Kingdom. Their website offers British consumers who are in the money market information on the goings-on and happenings in the financial world. From what type of services a loan firm offers to the cost and features of a product, FSA Mortgage Rate Comparison helps make sure that the consumer gets what is due him.
The FSA website also includes mortgage rate comparison tables to help consumers match up products one firm to various products from other firms which are more or less similar. These mortgage rate comparison tables include some interest rate data, plus information on withdrawals. Other features of these mortgage rate comparison tables are cash ISAs, deposit accounts, and fixed rate savings bonds.
In addition, the mortgage rate comparison tables on the FSA website contain information on income bonds, capital bonds, children’s bonus bonds, and National Savings & Investments accounts and certificates. With all these information provided to you through FSA mortgage rate comparison tables, savers will surely find the best place to invest their funds.
FSA also has mortgage rate comparison tables for mortgages, annuities, endowments, and ISAs (unit trust and OEICs). Other mortgage rate comparison tables are those for stakeholder pensions, mortgage endowments, and investment bonds.
Mortgage Rate Comparisons and Shopping
Shopping is the best way to do a mortgage rate comparison. Not only does shopping allow you to get the all the information you need to do a complete mortgage rate comparison but also, it lets you have an idea on what services other firms are offering.
When you shop around to do a mortgage rate comparison, there are a few things you need to keep in mind. First, to get accurate information for your mortgage rate comparisons, see that any investment firm you are dealing is authorized.
Second, do make sure that you know what you are looking for. Mortgage rate comparisons are a serious activity to be undertaken and should not be taken lightly. Mortgage rate comparisons will help you make your informed decision on loans. Knowing what to look for in a mortgage is therefore important for a successful mortgage rate comparison.
When you find a product you like, read the product details before making a commitment. And also, a successful mortgage rate comparison means looking through the literature you get from investment firms. Find the key features included in the documents and do a mortgage rate comparison of these with more or less similar products from various other firms.
If there is anything at all that confuses you a bit or something that you do not understand while you’re doing your mortgage rate comparison, do not hesitate to ask for advice. A mortgage rate comparison is actually an effort on your part to get everything straight. This includes checking all paperwork and then contacting the firm immediately should you find any errors.
Before signing anything, make sure that you check other deals from other firms. After all, this is the real reason why you’re doing a mortgage rate comparison.
Variable Rate Mortgage
Variable rate mortgage is another term for adjustable-rate mortgage. Variable rate mortgage is a type of loan where the initial payments are low. After some time though, the interest rates of variable rate mortgage changes on a regular basis. These changes on variable rate mortgages are affected by several factors, such as changes in investor markets.
Because of its low initial payment, a lot of people like to take on a variable rate mortgage. Financial reports suggest that the risks you assume in taking a variable rate mortgage are considerable but the gains are even more so. This is because variable rate mortgages may turn out to be cheaper than fixed rate mortgages in the long run.
Several lenders offer variable rate mortgages among their product lines. Some of these lenders are listed below, along with a brief outline on their variable rate mortgage product.
Variable Rate Mortgage by ING Direct Mortgages
The ING Direct line of variable rate mortgages offers one of the lowest rates available in the market today. With a variable rate mortgage interest rate of less than 0.60% for a full five-year term, ING Direct variable rate mortgages are among the top-sellers.
As an added bonus, consumers who buy their variable rate mortgages from ING Direct have the option to convert their variable rate mortgage into a fixed rate mortgage of 3 years or more. This conversion from a variable rate mortgage to fixed rate can be done any time without penalties.
Every 3 months, ING Direct variable rate mortgage interest rate will be adjusted to reflect their prime rate.
Variable Rate Mortgage by CanEquity Mortgage Canada
The variable rate mortgage of CanEquity is based on a five year term. However, in this variable rate mortgage, only the first three years are closed, leaving years 4 and 5 open. This means that the 2 remainder years leave you absolutely free from any variable rate mortgage pre-payment penalty.
CanEquity’s initial interest rate for their variable rate mortgage is 1.74%. After this initial rate, payments for your variable rate mortgage will be based on CanEquity’s Prime rate of less than 0.40%.
Variable Rate Mortgage by National Mortgage
National Mortgage has three variable rate mortgage programs on its product lists. All three variable rate mortgages have initial payment rates based on current Prime rate of 4.00%. These variable rate mortgage programs have varying terms from 3 months, 6 months, to 5 years.
The 5-year variable rate mortgage has an initial payment rate of 4.25% but for the duration of 5 years, the rate would be less 0.75%. The same goes for the 6-month variable rate mortgage. Prime (4.25%) is less 1.40% for 6 months followed by prime less 0.40% for the remainder of the term. The 3-month variable rate mortgage on the other hand has prime less 2.25% for 3 moths followed by Canadian Bank Prime less 0.375% with 1% cash back and airmiles.
Variable Rate Mortgage by Scotiabank
The Scotia Ultimate Variable Rate Mortgage offers their consumers a Cap rate guarantee. Consumers are given the choice of buying the variable rate mortgage for a rate discount of 0.50% off Scotia’s Prime rate for the full three-year term. They can also opt to pay upfront cash back of 1.50% of the variable rate mortgage loan amount for the full three-year term.
Refinance Mortgage Rate Calculator
Refinancing is a smart move if you want to lower your monthly payment and overall interest bill. With refinance mortgages, you are also able to change the term of the loan to a shorter one so you can pay off the loan earlier and save more on interest.
There are actually several reasons why people want to take a refinance mortgage. This is also why refinance mortgage rate calculators are important. Refinance mortgage rate calculators help consumers determine the amount of savings they can make on their chosen loan type. Refinance mortgage rate calculators also aid you in finding out how much is your monthly payment for your refinancing loan.
The Internet refinance mortgage rate calculators show you the monthly payments you need to make for your mortgage. Aside from that, these refinance mortgage rate calculators also show you the total interest rate. If you’re more concerned on how much saving you will be able to make with a refinancing loan, refinance mortgage rate calculators will also help you on that.
The refinance mortgage rate calculator will ask you for your current loan information. For instance, on the refinance mortgage rate calculator, a field labeled Principal Balance will be provided along with the Monthly Payment and Annual Interest Rate fields. You need fill these up in order to start using the refinance mortgage rate calculator.
To complete the process, the website’s refinance mortgage rate calculator will also ask for your new loan information. Another three fields will be provided in the refinance mortgage rate calculator. The refinance mortgage rate calculator fields are: Annual Interest Rate, Term, and closing Costs. By checking on the Finance Closing Costs at the bottom part of the refinance mortgage rate calculator and then hitting the Calculate button, you can determine how many months it will take for your loan to break even on the closing costs.
For example, for the Principal Balance field on the refinance mortgage rate calculator, you put in $150,000 (Take note that the amount you place in this refinance mortgage rate calculator field represents the remaining pay-off balance). The Interest Rate of your current loan is 6% and the data you put in the refinance mortgage rate calculator Monthly Payment field is $899.30.
For the New Loan Information portion of the refinance mortgage rate calculator, you place the following data: 5% Annual Interest Rate, 30-year Term, and $0 for Closing Costs. Make sure that you check the box for Finance Closing Costs at the bottom of the refinance mortgage calculator before hitting the Calculate button.
The results of the refinance mortgage rate calculator would show you that your new monthly payment would be $805.23, $93.77 short of your current loan monthly payment. The refinance mortgage rate calculator would also display the difference in the interest rates of both loans. With the refinance mortgage rate calculator, you will be able to find that the total interest of your current loan would be $173,757.28 while your new interest after refinancing would be $139,883.68. This allows you to save $33,873.61 on interest.
Interest-Only Mortgage
There are only two things people should keep in mind before taking on an interest-only mortgage. The name interest-only mortgage is misleading. If truth be told, there is no such thing as an interest-only mortgage. In an interest-only mortgage, you will still have to pay for the loan principal. When you get an interest-only mortgage, what you’re really getting is an interest-only payment method which you can combine with other traditional mortgage types.
The other thing you need to keep in mind is that the stated benefits of interest-only mortgages are exaggerated. In a standard mortgage, 95% if each dollar paid to the lender goes to the loan interest. Thus on a $100,000 standard loan with 6% interest, the total payment would be $600 with the $500 going to interest and the other $100 for equity.
A Brief History of Interest-Only Mortgages
Interest-only mortgages are not relatively new concepts. The idea behind interest-only mortgages was spawned from the more flexible and more inventive jumbo mortgage markets. Because of this, interest-only mortgages are traditionally a loan type preferred by savvy investors and well-heeled clients who want to use the principal portion of their payment on other more productive investments.
Because interest-only mortgages are jumbo loans, the difference in monthly payment grows with the larger loan amount. For example, in a $100,000 interest-only mortgage loan, the per month difference is $100. If the loan is worth $1,000,000, then the difference per month grows to $1,000, a substantial amount that can be put to better use. The savvy investor can make it so that his investment using the money he gets from the per month difference growth of an interest-only mortgage can increase within a short period, thus leveraging incomes to build assets.
This is partly the reason why interest-only mortgages are still preferred by big-time investors. However, it is only natural to assume that there are some considerable risks associated with an interest-only mortgage, especially when it comes to stocks.
Interest-only mortgages have payment periods based on adjustable rate mortgages. This however is not always the case. Interest-only mortgage payment schedules are also offered in fixed rate mortgages as well. Interest-only mortgages have also gone mainstream so virtually anyone can borrow money with this type of loan.
Temporary Payment Periods
The payment periods for interest-only mortgages almost never run for the entire term of the loan. Even with a fixed rate mortgage, interest-only mortgages are still bound to be only temporary. And InterstFirst product only lets interest-only mortgage payments for half of the total term.
The expiration schedule of an interest-only mortgage payment is usually at the end of a set period. This makes interest-only mortgages compatible to “amalgam” adjustable rate mortgages. When the interest-only mortgage payment comes to an end your payment will then rise to include principal and interest.
The great thing about interest-only mortgages
Interest-only mortgage payments also have their advantages. Borrowers can find that there are various practical benefits that an interest-only mortgage can offer. First is that, interest-only mortgages can help you in accumulating assets. Because interest-only mortgages do not demand so much during its initial years, you can use the payment differential in a cash investment. The “spare” cash provided by interest-only mortgages may also be used for college money, retirement money, and even as a seasonal income factor.
Of course, you are the only person who can really tell if the mortgage option is right for you or not. However, awareness of the issues that surround those choices is a good way to make a more informed decision.
Fixed Rate Mortgage
There are several types of mortgages offered by lenders in the market. The most common of these types is fixed rate mortgages. Fixed rate mortgage loans are characterized by fixed rates and monthly payments that are generally for a 15-year and 30-year periods.
Fixed rate mortgages are popular in the consumer market because of its stability. Most consumers are hesitant to get house loans where the rates fluctuate with the changing interest rates of the market. Fixed rate mortgages are generally very affordable, especially when rates are low.
Consumers of fixed rate mortgages are faced with having to choose between a 15-year fixed rate mortgage or a 30-year fixed rate mortgage. Some prefer 15-year fixed rate mortgages because of the shorter duration. Other consumers choose 30-year fixed rate mortgages because the payments are considerably lower than the former.
Each type of fixed rate mortgages certainly has its own advantages and disadvantages. Here are some of them.
30-year Fixed Rate Mortgage – Advantages and Disadvantages
A 30-year fixed rate mortgage gives consumers the opportunity to borrow money on a long-term basis. They do this without having to worry about the change that might occur in fixed rate mortgage interest rates or payments of such.
Because the interest of a 30-year fixed rate mortgage is amortized over a longer period, the monthly payments for this are lower than those on 15-year loans. Lower monthly payments on 30-year fixed rate mortgages give consumers an extra resource which they can pour into other worthy investments.
On the other hand, this could also cause a slight disadvantage for 30-year fixed rate mortgage borrowers. The overall interest bill of a 30-year fixed rate mortgage is much higher because of the long amortization period. And because payments for 30-day fixed rate mortgages are usually used to pay up the interest rather than the principal at first, borrowers will be building up their equity at a slower pace.
The high interest rates of 30-day fixed rate mortgage loans do not necessarily stop consumers from taking this type of loan. They reason that higher interest bill for 30-day fixed rate mortgages increases the amount they can deduct at tax time. This could potentially reduce or perhaps, even eliminate their federal income tax liability.
15-year Fixed Rate Mortgage – Advantages and Disadvantages
One of the advantages that attract borrowers into taking a 15-year fixed rate mortgage is the fact that amortization periods for this type of loan are usually shorter. This allows 15-year fixed rate mortgage borrowers to build equity much quicker. And with a 15-year fixed rate mortgage, the overall interest bills are low – at least, considerably lower than those of longer-term loans. Interest rates of a 15-year fixed rate mortgage are also lower than 30-year loans.
The disadvantages however include significantly higher monthly payments, especially when compared with 30-year fixed rate mortgages. This setback of having a 15-year fixed rate mortgage may restrict home buyers to smaller houses than they might be able to afford with longer-term loans.
There are also other factors to consider when choosing which type of fixed rate mortgage you want to take. Keep in mind that you can actually do a prepayment for your fixed rate mortgage, that way, the principal amount may be significantly reduced each month. In this way, fixed rate mortgages may even be paid off sooner than the projected term.
Bi-Weekly Mortgage Calculator
Doing the math for bi-weekly mortgages might be too much of a hassle for the regular home buyer. A bi-weekly mortgage is actually just your normal mortgage payment cut in half. Every other week, you pay one half of your normal mortgage payment.
Let’s say for instance you have a mortgage interest of 8% on your $100,000 home. By doing a bi-weekly mortgage on this instead of a 30-year loan, you can estimate with a bi-weekly mortgage rate calculator that the amount of your savings can reach up to $48,000. Plus, you can even make 13 full payments and pay off early on your home. Using a bi-weekly mortgage rate calculator, you can see that bi-weekly payments will cost you $50 each month.
The Internet is a smorgasbord of mortgage calculators, including bi-weekly mortgage rate calculators. Below is list of websites that feature bi-weekly mortgage rate calculators for free use by their consumers.
Reduce-My-Mortgage.com Bi-Weekly Mortgage Rate Calculator
The Reduce-My-Mortgage website offers a bi-weekly mortgage rate calculator that allows you to enter your personal information so you can start calculating your bi-weekly mortgage payments. Their bi-weekly mortgage rate calculator also helps you determine how much you can save in both time and money.
The site also features an update corner where bi-weekly mortgage buyers are told about recent mortgage news. These news like the home loan errors found out by the CLA (Consumer Loan Advocates) helps the consumer realize the importance of using a bi-weekly mortgage rate calculators. In addition to helping you calculate your savings, this bi-weekly mortgage rate calculator may also be sued on Automobile, Boat, Student, and Business loans.
Vlender.com Bi-Weekly Mortgage Rate Calculator
Virtual Lender is a Turkish website offering solutions such as bi-weekly mortgage rate calculators for either the individual loan officer or the entire mortgage company. Their bi-weekly mortgage rate calculator helps consumers determine the amount and projected period of loan payments.
1Stop-MortgageCalculator.com Bi-Weekly Mortgage Rate Calculator
This website offers a monthly and bi-weekly mortgage rate calculator to help you determine your payments. The only thing you need to do with the 1 Stop monthly and bi-weekly mortgage rate calculator is enter the principal loan into the field provided. After that, also type in the interest rate and the loan term into the bi-weekly mortgage rate calculator and find out how much your monthly payment will be. Also, this bi-weekly mortgage rate calculator will also let you know how much you save if you use bi-weekly payments.
DinkyTown.net Bi-Weekly Mortgage Rate Calculator
The bi-weekly mortgage rate calculator of this website will show you the possible savings you can make with your type of mortgage loan. Accelerated bi-weekly mortgage payment is the technique used by this bi-weekly mortgage rate calculator in order to determine the amount of savings. Bi-weekly payments usually work in only one way. They can accelerate your mortgage pay off by paying half of your normal monthly payment every two weeks. By the end of each year, you can see using a bi-weekly mortgage rate calculator that what you have paid for is equivalent to 13 monthly payments instead of 12. This technique used by this bi-weekly mortgage rate calculator can take several years off your mortgage term and also save you thousands of dollars in interest.
Best Mortgage Calculator
In the business of mortgages and loans, it is best that you have all the tools you need in order to help you make a better informed decision. Mortgage calculators help consumers compute interest rates and monthly payments of mortgages being offered.
Arriving at the best decision usually means using the best mortgage calculators. Below is a short list of sites that offer the best mortgage calculators that the Web can offer.
Mortgage-Payment-Calculators.com – This site offers one of the best mortgage calculators in the Web. What’s more, their best mortgage calculators are offered for free to help you compute Amortization Tables, Monthly Payments, Loan Comparisons, Home Affordability, Early Pay Offs, Refinances, and to PreQuality a mortgage. With this best mortgage calculator website, you can also have access to online help on your mortgages from experts. Get the best ideas and get the best options with this best mortgage calculator website.
Interest.com Best Mortgage Calculators – This best mortgage calculator online site answers several questions that borrowers frequently ask – What will be my Monthly Payment? How much do I have to make to afford the loan on a particular home? How much can I afford to borrow? When you want to know how much your home loan will save you in taxes, this is the best mortgage calculator you can use. Other options featured in this best mortgage calculator website are an APR (Annual Percentage Rate) calculator, a Budget Calculator, and several Deposit Calculators.
Mortgage-Calc.com – This site offers you one of the best mortgage calculators in the Web. Their best mortgage calculators can give you quick and easy access to important calculations and information to help you with your mortgage needs. From how much you can afford and how much you can borrow, this best mortgage calculator website answers all your questions on mortgages and loans.
Bankrate.com Best Mortgage Calculators – If you want to know what your monthly mortgage payments would be, then Bankrate.com has the best mortgage calculators to help you with that. The best mortgage calculators of this site include amortization schedules, payment calculations, and more.
HSH.com Best Mortgage Calculators and Financial Calculators – This best mortgage calculator website offers you with a number of ways to estimate your credit limit for mortgages and other loan types. Play the “what-if” scenarios with the HSH best mortgage calculator.
As an added bonus, this best mortgage calculator site lets you download for free the powerful APR calculator from Wheatworks Software. Perhaps the best mortgage calculator offering this site has is its unique Income Qualification Calculator which helps you discover how much income you need to afford a certain monthly payment.
Homefair.com – This site’s Mortgage Qualifier is perhaps one of the best mortgage calculators there is. This best mortgage calculator is used to find out the maximum amount of loan you can qualify for. The results give out by this best mortgage calculator are based on standard lender rules.
Jeacle.ie – Or Karl Jeacle’s Best Mortgage Calculator. This best mortgage calculator website lets you enter your loan data into designated fields on their online forms uploaded into their site. The best mortgage calculator allows you to compute the principal amount, the interest rate, the years, annual insurance, annual tax, and annual inflation. Aside form this, this best mortgage calculator contains such data as Monthly prepayment, annual prepayment, and one-time prepayment.
Bank Rate Mortgages
Why do bank rate mortgages vary? What makes the interest rates of these bank rate mortgages rise? What makes those of bank rate mortgages fall? These questions race through our minds whenever we are faced with a financial situation that requires us to understand a little bit more about bank rate mortgages.
The answer is simple enough. Bank rate mortgages are moved by several factors that are different from but are somehow connected with each other. Not surprisingly, one of these factors that affect the movement of bank rate mortgages is you – the consumer.
Bank mortgage rate money come from any number of sources. Bank mortgage rate money may come from deposits at banks and brokerages. Most bank mortgage rate money comes from investors who comprise the collective term, “capital markets.” These capital markets are where the purchase of debt instruments like bonds and bank rate mortgages are done.
To attract investors, sellers of bank rate mortgages and bonds in these capital markets compete with one another. This is done by providing their consumers with a variety of products, such as bonds and bank rate mortgage. These bank rate mortgage products have varying levels of risks and gains over given periods of time. In turn, these offerings compete with other investments which possess certain similarities in terms of performance. These include US Treasuries, corporate bonds, foreign bonds, bank rate mortgages, and others.
The bank rate mortgage investors act like typical consumers. That is, like you, they want two opposing things: low payments on their bank rate mortgages and high returns on investments. The demands of these investors play a significant role in moving the yields of the bank rate mortgage markets. The marketplace for bank rate mortgages is crowded because investors literally have hundreds of places to put their money into.
Sellers of various products like bank rate mortgages compete with others for those investor dollars. Demands for specific products, e.g. bank rate mortgages, rise and fall according to the changes made in the investment strategies. For instance, if demand for bank rate mortgages falls, a change needs to be done to attract investors again. And this is usually done by raising interest rates on bank rate mortgages.
Then again, bank rate mortgages are never that simple. The market makers of bank rate mortgages do not have the investors alone as their client. The other half of the coin is the home buyers. These two clients of bank rate mortgage markets take opposing sides when it comes to investments. The investors want the highest possible return on their investments. On the other hand, the home buyers want the lowest possible interest rates on their bank rate mortgages. The result is a virtual tug-of-war.
As interest rates of bank rate mortgages decline, the interest of investors and home consumers alike are tweaked just a little bit. But this all depends on the direction of the economic growth, inflation, appetite for the given product, and several other factors. A typical outcome of lowering rates for bank rate mortgages though is lesser interest on the part of the investors. No investor would put down in his book a bank rate mortgage with a low interest rate.
Adjustable-Rate Mortgage Payment
People are asking if home loans in newspaper ads showing astonishingly low rates are for real. These ads are what we call adjustable-rate mortgage payments.
Loans with an adjustable-rate mortgage payment type usually have low rates only for a short time. Rates of adjustable-rate mortgage payment are adjusted on a regular basis, usually after the first year is over. This means that the interest rate and the amount of the monthly adjustable-rate mortgage payment may vary, going either up or down.
With adjustable-rate mortgage payments, there is little chance of you knowing what your future monthly payment would be. Some types of adjustable-rate mortgage payments have limits to the interest-rate increase. When an adjustable-rate mortgage reaches a certain percentage, the interest rate will no longer increase for the duration of that period. But at the end of that period, the adjustable-rate mortgage payment will vary once more.
Determining whether or not an adjustable-rate mortgage payment is the right type of loan for you usually depends on your financial situation. Also, it depends on the type of adjustable-rate mortgage payment you plan to make. Adjustable-rate mortgage payments have characteristics that might ultimately prove risky in the long run. Because the dynamics of interest rates in the market are never certain, the amount of your adjustable-rate mortgage payments are uncertain as well.
Adjustable-rate mortgage payments generally have lower initial interest rates compared to fixed-rate mortgages. This makes an adjustable-rate mortgage payment more affordable and easier on the pocket. Adjustable-rate mortgage payments may also help you qualify for a larger loan. This is due to the fact that lenders sometimes decide to extend a loan provided that your current income is steady and your adjustable-rate mortgage payments for the first year are up-to-date.
Another advantage of having an adjustable-rate mortgage payment type of loan is that it could turn out to be less expensive in the long run. With an adjustable-rate mortgage payment, the chance of interest rates going higher is equal to its chance of going lower. Now here in also lies the risk of having an adjustable mortgage payment.
When it comes to having an adjustable mortgage payment, there are no guarantees. It is either the interest rates will lower down or it will rise up. Lower interest rates mean lower monthly adjustable-rate mortgage payments. Higher interest rates mean higher monthly adjustable-rate mortgage payments for you. There is no middle ground. Adjustable-rate mortgage payments are basically a trade-off – you exchange more risk for lower rate with an adjustable-rate mortgage payment.
But despite this, there are some ways to circumvent the risks and increase your chances of landing a good investment in an adjustable-rate mortgage payment. Below are some questions you need to consider:
• Is there a possibility that my income will rise up enough to cover higher adjustable-rate mortgage payments should interest rates go up?
• Is there a chance that I might take on other sizable debts like a loan for a car or school tuition in the near future?
• Will my adjustable-rate mortgage payments increase even though interest rates remain the same?
• How long do I plan to own this home? (If you plan on selling soon, an increase in interest rates should not be a problem for your adjustable-rate mortgage payment.)
