A Long-Term Loan Mortgage and Loan Calculators

Mortgages: A Long-Term Loan

A mortgage is basically a long-term loan that you arrange through a bank or other financial institution, or even through the seller of the property. The house and/or property serve as collateral for the loan.

A home mortgage is most likely the largest debt you will assume. You typically pay off that debt in monthly payments over a long period of time, most often 15 to 30 years.

What's In a Payment?
A monthly mortgage payment typically includes the following, known as PITI:

* Principal
* Interest
* Real estate Taxes
* Property Insurance and, often, private mortgage insurance, known as PMI.

PMI gives the lender protection if the homeowner should default on the loan. The mortgage company charges insurance if the down payment is less than 20 percent of the sale price or appraised value. PMI usually can be eliminated once the principal balance of the mortgage reaches 80 percent of the sale price or appraised value, which is known as the loan-to-value (LTV) ratio.

The process of paying the principal takes years because mortgages are based on a repayment plan called amortization. During the years of the mortgage, a homeowner pays a lot of money toward interest in order to have manageable monthly payments on the huge house debt. During the first few years, most of the mortgage payments will be applied toward the interest. During the final years of the loan, the payments will be applied primarily to the remaining principal.

Example
Let's look at a $100,000 mortgage, at a fixed interest rate of 7.5 percent, for 30 years. In three decades, the homeowner would pay $151,717 in interest.

Of course, you cannot put a price on the pleasure of living in your own home and building equity, an unencumbered interest in your property. Equity grows as you pay off the principal of the mortgage and as the property appreciates in value. Also, there are tax incentives, since mortgage interest is a deduction on your federal income tax.

Still, the amount of interest you will pay may affect your decision on what type of mortgage you choose.

Mortgage and loan calculators are one of the first steps in the mortgage process. First, find out what kind of mortgage works best for you. There are many choices out there! Do you want a fixed rate mortgage, or an adjustable rate mortgage? Then use these mortgage calculators to determine the amount of mortgage you can afford with the Pre Qualify Calculator. Also determine your new monthly mortgage payments.

Mortgage calculators can also be used to calculate payments on debt consolidation mortgage loan and see your monthly savings! Use the Refinance Mortgage Calculator for this. Make it simple to work out how much you can afford to borrow and exactly what your repayments will be using time scales and interest rates.

There are multiple financial factors that go into determining the right mortgage for you. By using our Loan Comparison Calculators , you can account for all of these factors and get an accurate monthly payment figure.

Our Amortization Schedule allows you to find a payment plan that enables you to reduce your debt gradually through monthly payments of principal.

Our Mortgage Calculators Enable you to:

1. Quick Mortgage Calculators to determine affordable mortgage and produce other valuable information about your loan.
2. How much house you can afford based on the income and debt information you supply with our payment calculator.
3. Calculate Monthly mortgage payments based on loan amounts, interest rates and loan terms.
4. How much extra to pay in your monthly mortgage payment to pay off the loan in the number of years you select.
5. Mortgage Calculator Comparisons with up to three different mortgage products, both fixed and adjustable.
6. Amortization Schedules, Amortization Calculator, and Tables based on the loan amount, interest and term.
7. Refinance Mortgage Calculator to determine when it makes sense to refinance your home.

This unique calculator allows you to compare up to three different loan programs, both Fixed rate and ARM(Adjustable Rate Mortgages).

Directions for defining loan plans:

1. Loan Type: Choose the desired loan type by clicking on the down arrow next to each loan type for each desired loan plan. Note: If you select an ARM plan you must complete the fields below for ARM type loans. When ARM is
selected, the bottom fields will become enterable.

2. Loan Term: Enter the loan term in years for each plan. (You may enter different loan term for each loan plan (ie. 15 yr., 30 yr., etc.)

3. Interest Rate: Enter the desired interest rate for each plan. For ARMs please enter the start rate.

4. Loan Amount: Enter the desired loan amount for each plan.

5. No. of years before Payoff: Enter the number of years you are expecting to payoff the loan. Note: This field allows you to be specific in the true comparison of each loan program according to when you feel you may payoff the loan or sell the home. If you are not sureenter 30 years. This field must have a valid non zero value, and must be entered.

ARM specific information

1. Maximum Interest Rate: The interest rate to which this loan can be increased to. For the most realistic number,this should be the current index rate (e.g. 11th District, T. Bill, etc) plus the margin the lender is charging (e.g. 2.75%).

2. Months before first Adjustment: ARM loans normally adjust from their initial rate. This adjustment happens based on your specific loan plan. Usually ARM loans make their first rate adjustment after 12months. However, there are plans that may adjust after 3 months.

3. Months between Adjustments: The subsequent adjustments come every so often. Normally every 6 months or 12 months, and they usually follow the
same pattern (e.g. your ARM loan will adjust every 12 months for the life of the loan and stop once they reach the maximum rate as per your agreement with the lender).

4. Rate Change per Adjustment: The interest rate adjustment per each adjustment period.This is usually 1% every 6 months or 2% every 12 months (e.g. if your initial rate is 6% and you loan adjusts for 2% every 12 months, then after 1 year your rate will increase to8% from 6%. The rate will continue adjusting until it reaches the maximum interest rate defined by you.)


from www.calculators4mortgages.com