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This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.
Buyers are often tempted to jump into refinancing their home
loan in order to save a half (or quarter) percent on their
existing mortgage. Unfortunately, those "no cost" loans are
rarely "no cost". Here are a few tips to help make sure your
loan is a true no cost loan.
Verify how the lender gets paid.
Nine times out of ten, a no cost loan is structured so that a
$200,000 loan is refinanced, and the lender gets their pay by
inflating the loan. After your "no-cost" refinance, it may seem
nice because your payment is $40 or $50 a month cheaper,
however, instead of only having 25 years before your loan is
paid off, you now are going to take 30 years to pay it off
because of the refinance. Not only have you "reset" your
amortization schedule, but you now owe $203,000 on the loan you
only owed $200,000 on prior to the refinance. Although your
monthly payment is lower, and you didn't pay any money out of
pocket (yet) for the loan, it isn't really a no cost loan. When
you go to sell your home you'll now owe $3000 more than you
would have had you not refinanced.
Make sure your loan officer gets paid via the yield
spread.
In order to make sure your loan officer gets paid via the yield
spread vs. out of your pocket, or by inflating the mortgage
loan, ask your loan officer the following question: "If we go
through with this refinance, can you please make sure that my
loan's principal balance isn't a penny more than what it is now,
and also make sure that I don't pay a penny out of my pocket?"
By asking that exact question, you will force your loan officer
to make sure they get paid by inflating your interest rate high
enough that they get paid via "yield spread" from the loan
institution who funds the loan. If they can't get you such a
loan, it is NOT worth refinancing your loan. (For example, if
you refinanced a $200,000 loan, you have 3 choices:
(1)Pay about $2000 out of pocket as an "origination fee" to
your loan officer and get a 5.5% interest rate.
(2) Pay nothing out of pocket, but get a new loan at
$202,000 - $2000 of which will go toward paying your loan
officer's origination fee. (This will also get a 5.5% interest
rate)
(3) Refinance your loan at $200,000, pay nothing out of
pocket, but take a 5.875% or 6% interest rate. Yes, you'll have
a higher interest rate, but this is the only true "no cost"
option. If the interest rate you are given is not better than
your existing loan rate, you should NOT refinance your loan.
In a nutshell, option 3 is the only option where
your loan officer gets paid without it costing you money out of
pocket. If there is a chance you will sell your home within the
next couple or few years, you should never refinance with any
other option than #3. If you think you will own the home longer
than 3 years, options 1 or 2 might be worth your while.
About the author:
Joel McDonald is the founder of Make-Them-Pay.com<
/a> - a website dedicated to empowering home buyers to get the
most out of their real estate agents.