What is mortgage calculator?
According to Wikipedia, a web based free encyclopedia, a Mortgage Calculator is “an automated tool that enables the user to quickly determine the financial implications of changes in one or more variables in a mortgage financing arrangement. The major variables include: loan principal balance, periodic interest rate, compound interest, number of payments per year, total number of payments and the regular payment amount”.
A mortgage calculator can be a very practical tool when buying a house. It’s not your typical calculator where you can resolve some mathematical equations. A mortgage calculator can give quick and reliable answers to the most savvy buyer. With this tool you can compare interest rates, costs, payment schedules and even play with the numbers, meaning, you can find out how much your monthly payment would be when you do a down payment/principal ratio equation and change the length of the loan by adding more dollars to your monthly payment.
How does a Mortgage Calculator work?
The equation to come up with numbers is not simple. I can write about it and try to explain, I’ve tried to understand it myself, and believe me it’s not an easy task. Why complicate yourself trying to come up with the numbers you need to make a decision on whether you can or you cannot afford the house you like? A mortgage calculator does all the work for you. The input information is key to determine your monthly payment. Mortgage calculators vary by manufacturer but most of them have a common denominator: the information you will need to provide, to come up with the results you are looking for.
For example: you will need to have a loan amount, an interest rate, the length of the mortgage and the home value. Added information that is also necessary is the following: annual taxes, annual insurance and annual PMI, short for private mortgage insurance. Now all of this information is very relevant when using a Mortgage calculator but the information that is essential in this process is the interest rate and the length of the loan. When you change this two variables, meaning you input a lower interest rate, then you will get a lower monthly payment. How much lower? well, that really depends on the amount of the loan.
I hope this information about Mortgage calculators is useful for you. Now the next question is, do you as a home buyer really need to have one or is this a tool more oriented to Real Estate Agents and Loan officers. Personally, I think the latter.
A mortgage calculator can be a very practical tool when buying a house. It’s not your typical calculator where you can resolve some mathematical equations. A mortgage calculator can give quick and reliable answers to the most savvy buyer. With this tool you can compare interest rates, costs, payment schedules and even play with the numbers, meaning, you can find out how much your monthly payment would be when you do a down payment/principal ratio equation and change the length of the loan by adding more dollars to your monthly payment.
How does a Mortgage Calculator work?
The equation to come up with numbers is not simple. I can write about it and try to explain, I’ve tried to understand it myself, and believe me it’s not an easy task. Why complicate yourself trying to come up with the numbers you need to make a decision on whether you can or you cannot afford the house you like? A mortgage calculator does all the work for you. The input information is key to determine your monthly payment. Mortgage calculators vary by manufacturer but most of them have a common denominator: the information you will need to provide, to come up with the results you are looking for.
For example: you will need to have a loan amount, an interest rate, the length of the mortgage and the home value. Added information that is also necessary is the following: annual taxes, annual insurance and annual PMI, short for private mortgage insurance. Now all of this information is very relevant when using a Mortgage calculator but the information that is essential in this process is the interest rate and the length of the loan. When you change this two variables, meaning you input a lower interest rate, then you will get a lower monthly payment. How much lower? well, that really depends on the amount of the loan.
I hope this information about Mortgage calculators is useful for you. Now the next question is, do you as a home buyer really need to have one or is this a tool more oriented to Real Estate Agents and Loan officers. Personally, I think the latter.
Three types of insurance you must have
When evaluating what kind of insurances we must have, three come to mind, of course, there are dozens of insurances one can buy making it more difficult and confusing to choose which ones we really need. There are three different coverage’s we consider essential: Possessions, Health, and Life insurance.
Possession is a broad word, by possessions we mean, homeowner’s or renter’s insurance, depending on your case, and car insurance. When in the market for homeowners insurance you must take a few items into consideration. You need to make sure your homeowners or renter’s insurance will also cover some of your personal belongings: Jewelry, art, and electronics. Let’s begin with the protection of the property in the case that you are a homeowner. Here you have two options: to buy a cash value policy or a replacement policy.
A cash value policy will pay for the value of the property at the time of the incident that means, if you bought your property for 500,000 but at the time it got ruined it was worth 450,000 that’s how much your cash value policy will pay for. The other option is to buy a replacement policy, this is more expensive but it guarantees you that you will be able to rebuild your house from scratch at a comparable quality of the one destroyed. When buying either one of the policies, don’t forget to tell your agent of any home improvements you have made. It’s important that your homeowner’s insurance also covers personal items such as jewelry, art and electronics.
Every insurance company is different, but personal belongings are usually covered up to 75 % of their face value. In the event that you are in the market for renter’s insurance, you need to make sure that your renter’s insurance also covers the belongings mentioned above: jewelry, art and electronics. Last but not least, it is important to keep a list of the personal items that you have and considered to be included in your homeowners or renter’s insurance. This will make it easier in the event that you do need your items to be replaced because they were stolen or destroyed in a disaster.
Car Insurance:
By State law, any car owner that holds a driver’s license must have car insurance. According to experts you should base the amount of coverage that you need on the assets that you have. The more assets, the more coverage. Here’s what’s recommended:
You might be familiar with this numbers:50/100/25 they refer to the amount of damage covered by the policy.$ 50,000 bodily injury liability for one person injured in an accident$ 100,000 for all people injured in an accident$ 25,000 property damage liability Every state has its own minimum liability coverage.
Again, when buying car insurance keep in mind the amount of assets that you have, don’t over buy but also don’t under buy. Uninsured/Underinsured motorist: You might be in for a big surprise even if you have car insurance but the person who hit you does not. PLEASE ask your agent about Uninsured/Underinsured motorist coverage. When buying car insurance, do consider your driving habits, the amount of driving that you do and the area where you live.
HEALTH INSURANCE
President Barack Obama just signed the Health Reform bill, what does this means?It means that millions of people will have to buy their own health insurance. Health Insurance can be very expensive, especially if you are an older person or if you are a woman who wants to get pregnant. Under the new health reform bill, pre-existing conditions will have to be accepted, that’s a good thing, unfortunately it won’t be enforced until 2014. Children’s with pre-existing conditions will not be excluded under any insurance policy; this takes effect in mid-September 2010.
Children 26 years or younger will be able to stay on their parent’s family policy, this took effect immediately. There are no regulations as to what the cost might be for covering children 26 and younger. Bottom line, the new health reform law won’t go into full effect until years to come, in the mean time, people get sick. You need to buy a health insurance that will cater to your specific needs, there are many insurance companies out there eager to get your business, but do consider their deductibles, co-payments, lifetime maximums and of course the limitations of their coverage.
LIFE INSURANCE
Do you have assets, children, dependents that you want to make sure they will be okay financially?
If you answer yes to any of the above, you definitely should consider buying life insurance. Buying life insurance could be as confusing as buying health insurance. I will try to make it easier for you. There are two types of life insurance: Term Insurance and Permanent Insurance. Term Insurance offers death benefits only if you die. Permanent insurance also know as whole life insurance, also offers death benefits and a savings account. If you are still alive when the insurance expires, you get some of your money back. How much? It depends on your premium. Let me share with you a scenario for a female 37 years old and for a male 33 years old:
The monthly cost of $250,000 level life insurance for a young lady of37 years is $22.56 per month.The cost for a 33 year old male for $250,000 is $22.35 per month.This is for a 20 year policy where the monthly cost stays all 20 years and pays upon death for any reason, not just accidental death.There is an exclusion for suicide within the first 2 years.After 2 years they pay for that also. It would be $13.18and $12.77 for a 10 year policy or $$31.52 and $33.81 for a 30 yearpolicy.
Buying any kind of insurance can be a very confusing experience. Having a reliable and trust worthy agent can make the difference between making your decisions really protect your assets.
Possession is a broad word, by possessions we mean, homeowner’s or renter’s insurance, depending on your case, and car insurance. When in the market for homeowners insurance you must take a few items into consideration. You need to make sure your homeowners or renter’s insurance will also cover some of your personal belongings: Jewelry, art, and electronics. Let’s begin with the protection of the property in the case that you are a homeowner. Here you have two options: to buy a cash value policy or a replacement policy.
A cash value policy will pay for the value of the property at the time of the incident that means, if you bought your property for 500,000 but at the time it got ruined it was worth 450,000 that’s how much your cash value policy will pay for. The other option is to buy a replacement policy, this is more expensive but it guarantees you that you will be able to rebuild your house from scratch at a comparable quality of the one destroyed. When buying either one of the policies, don’t forget to tell your agent of any home improvements you have made. It’s important that your homeowner’s insurance also covers personal items such as jewelry, art and electronics.
Every insurance company is different, but personal belongings are usually covered up to 75 % of their face value. In the event that you are in the market for renter’s insurance, you need to make sure that your renter’s insurance also covers the belongings mentioned above: jewelry, art and electronics. Last but not least, it is important to keep a list of the personal items that you have and considered to be included in your homeowners or renter’s insurance. This will make it easier in the event that you do need your items to be replaced because they were stolen or destroyed in a disaster.
Car Insurance:
By State law, any car owner that holds a driver’s license must have car insurance. According to experts you should base the amount of coverage that you need on the assets that you have. The more assets, the more coverage. Here’s what’s recommended:
You might be familiar with this numbers:50/100/25 they refer to the amount of damage covered by the policy.$ 50,000 bodily injury liability for one person injured in an accident$ 100,000 for all people injured in an accident$ 25,000 property damage liability Every state has its own minimum liability coverage.
Again, when buying car insurance keep in mind the amount of assets that you have, don’t over buy but also don’t under buy. Uninsured/Underinsured motorist: You might be in for a big surprise even if you have car insurance but the person who hit you does not. PLEASE ask your agent about Uninsured/Underinsured motorist coverage. When buying car insurance, do consider your driving habits, the amount of driving that you do and the area where you live.
HEALTH INSURANCE
President Barack Obama just signed the Health Reform bill, what does this means?It means that millions of people will have to buy their own health insurance. Health Insurance can be very expensive, especially if you are an older person or if you are a woman who wants to get pregnant. Under the new health reform bill, pre-existing conditions will have to be accepted, that’s a good thing, unfortunately it won’t be enforced until 2014. Children’s with pre-existing conditions will not be excluded under any insurance policy; this takes effect in mid-September 2010.
Children 26 years or younger will be able to stay on their parent’s family policy, this took effect immediately. There are no regulations as to what the cost might be for covering children 26 and younger. Bottom line, the new health reform law won’t go into full effect until years to come, in the mean time, people get sick. You need to buy a health insurance that will cater to your specific needs, there are many insurance companies out there eager to get your business, but do consider their deductibles, co-payments, lifetime maximums and of course the limitations of their coverage.
LIFE INSURANCE
Do you have assets, children, dependents that you want to make sure they will be okay financially?
If you answer yes to any of the above, you definitely should consider buying life insurance. Buying life insurance could be as confusing as buying health insurance. I will try to make it easier for you. There are two types of life insurance: Term Insurance and Permanent Insurance. Term Insurance offers death benefits only if you die. Permanent insurance also know as whole life insurance, also offers death benefits and a savings account. If you are still alive when the insurance expires, you get some of your money back. How much? It depends on your premium. Let me share with you a scenario for a female 37 years old and for a male 33 years old:
The monthly cost of $250,000 level life insurance for a young lady of37 years is $22.56 per month.The cost for a 33 year old male for $250,000 is $22.35 per month.This is for a 20 year policy where the monthly cost stays all 20 years and pays upon death for any reason, not just accidental death.There is an exclusion for suicide within the first 2 years.After 2 years they pay for that also. It would be $13.18and $12.77 for a 10 year policy or $$31.52 and $33.81 for a 30 yearpolicy.
Buying any kind of insurance can be a very confusing experience. Having a reliable and trust worthy agent can make the difference between making your decisions really protect your assets.
Choosing a Fixed or ARM Option
One of the most important decisions a homeowner will have to make when deciding to re-finance their home is whether they want to refinance with a fixed mortgage, an adjustable rate mortgage (ARM) or a hybrid loan which combines the two options. The names are pretty much self explanatory but basically a fixed rate mortgage is a mortgage where the interest rate remains constant and an ARM is a mortgage where the interest rate varies. The amount the interest rate varies is usually tied to an index such as the prime index. Additionally there are usually clauses which prevent the interest rate from rising or dropping dramatically during a specific period of time. This safety clause provides protection for both the homeowner and the lender.
Advantages of a Fixed Option
A fixed re-financing option is ideal for homeowners with good credit who are able to lock in a favorable interest rate. For these homeowners the interest rate they are able to retain makes it worthwhile for the homeowner to re-finance at the new interest rate. The major advantage to this type of re-financing options is stability. Homeowners who re-finance with a fixed mortgage rate do not have to be concerned about how their payments may vary during the course of the loan period.
Disadvantages of a Fixed Option
Although the ability to lock in a favorable interest rate is an advantage it can also be considered a disadvantage. This is because homeowners who re-finance to obtain a favorable interest rate will not be able to take advantage of subsequent interest rate drops unless they re-finance again in the future. This will result in the homeowner incurring additional closing costs when they re-finance again.
Advantages of an ARM Option
An ARM re-finance option is favorable in situations where the interest rate is expected to drop in the near future. Homeowners who are skilled at predicting trends in the economy and interest rates may consider re-financing with an ARM if they expect the rates to drop during the course of the loan period. However, interest rates are tied to a number of different factors and may rise unexpectedly at any time despite the predictions by industry experts.
A homeowner who can predict the future would be able to determine whether or not an ARM is the best re-financing option. However, since this is not possible homeowners have to either rely on their instincts and hope for the best or select a less risky option such as a fixed interest rate.
Disadvantages of an ARM Option
The most obvious disadvantage to an ARM re-financing option is that the interest rate may rise significantly and unexpectedly. In these situations the homeowner may suddenly find themselves paying significantly more each month to compensate for the higher interest rates. While this is a disadvantage, there are some elements of protection for both the homeowner and the lender. This often comes in the form of a clause in the terms of the contract which prevents the interest rate from being raised or lowered by a certain percentage over a specific period of time.
Consider a Hybrid Re-Financing Option
Homeowners who are undecided and find certain aspects of fixed rate mortgages as well as certain aspects of ARMs to be appealing might consider a hybrid re-financing option. A hybrid loans is one which combines both fixed interest rates and adjustable interest rates. This is often done by offering a fixed interest rate for an introductory period and then converting the mortgage to an ARM. In this option, lenders typically offer introductory interest rates which are extremely enticing to encourage homeowners to choose this option. A hybrid loan may also work in the opposite way by offering an ARM for a certain amount of time and then converting the mortgage to a fixed rate mortgage. This version can be quite risky as the homeowner may find the interest rates at the conclusion of the introductory period are not favorable to the homeowner.
Advantages of a Fixed Option
A fixed re-financing option is ideal for homeowners with good credit who are able to lock in a favorable interest rate. For these homeowners the interest rate they are able to retain makes it worthwhile for the homeowner to re-finance at the new interest rate. The major advantage to this type of re-financing options is stability. Homeowners who re-finance with a fixed mortgage rate do not have to be concerned about how their payments may vary during the course of the loan period.
Disadvantages of a Fixed Option
Although the ability to lock in a favorable interest rate is an advantage it can also be considered a disadvantage. This is because homeowners who re-finance to obtain a favorable interest rate will not be able to take advantage of subsequent interest rate drops unless they re-finance again in the future. This will result in the homeowner incurring additional closing costs when they re-finance again.
Advantages of an ARM Option
An ARM re-finance option is favorable in situations where the interest rate is expected to drop in the near future. Homeowners who are skilled at predicting trends in the economy and interest rates may consider re-financing with an ARM if they expect the rates to drop during the course of the loan period. However, interest rates are tied to a number of different factors and may rise unexpectedly at any time despite the predictions by industry experts.
A homeowner who can predict the future would be able to determine whether or not an ARM is the best re-financing option. However, since this is not possible homeowners have to either rely on their instincts and hope for the best or select a less risky option such as a fixed interest rate.
Disadvantages of an ARM Option
The most obvious disadvantage to an ARM re-financing option is that the interest rate may rise significantly and unexpectedly. In these situations the homeowner may suddenly find themselves paying significantly more each month to compensate for the higher interest rates. While this is a disadvantage, there are some elements of protection for both the homeowner and the lender. This often comes in the form of a clause in the terms of the contract which prevents the interest rate from being raised or lowered by a certain percentage over a specific period of time.
Consider a Hybrid Re-Financing Option
Homeowners who are undecided and find certain aspects of fixed rate mortgages as well as certain aspects of ARMs to be appealing might consider a hybrid re-financing option. A hybrid loans is one which combines both fixed interest rates and adjustable interest rates. This is often done by offering a fixed interest rate for an introductory period and then converting the mortgage to an ARM. In this option, lenders typically offer introductory interest rates which are extremely enticing to encourage homeowners to choose this option. A hybrid loan may also work in the opposite way by offering an ARM for a certain amount of time and then converting the mortgage to a fixed rate mortgage. This version can be quite risky as the homeowner may find the interest rates at the conclusion of the introductory period are not favorable to the homeowner.
Subscribe to:
Posts (Atom)
