Mortgage Rate Calculators

Mortgage Rate Calculator

Many prospective homeowners applying for actend to have two concerns before they agree to sign: How much interest will I end up paying, and can I afford the monthly payments?

Unless you're a robot or mathematical savant, chances are you won't be able to calculate these figures off the top of your head. Luckily, programmers have developed several mortgage calculators over the years that help you quickly and easily answer these questions.
But how do you use these calculators correctly, and to what end? Are all mortgage calculators created equal?

 Commonly Used Terms

Mortgage calculators don't always use the same language. It's very possible you'll see multiple ways of describing the same thing. For example, one calculator might have a space for "APR" while another asks for the mortgage's "interest rate," when in fact these two terms mean the same.
Here's a brief list of the three core elements all mortgage calculators have:

• Rate/interest rate/APR – This is how much interest accrues on your mortgage each year. Most times the calculator will ask you to enter this amount as a percentage and not a decimal, unless it specifies otherwise. For example, if you have an interest rate of 4.25%, enter "4.25" instead of "0.0425".
• Principal – This is the face value of your mortgage on day one and represents the total amount of money you haven't repaid yet. If your mortgage is $400,000 on day one, then your principal is $400,000. If you pay $100,000 of that over the next few years, then your principal will be $300,000.
• Mortgage length/number of payments/amortization period – It's assumed that, if you're using a mortgage calculator, you're using it before you take out your mortgage. If that's the case, these terms will be the same. But if you're midway through paying down your mortgage, you would want to find the "number of payments" by subtracting how many you've made from the total expected number of payments. For example, if you have a 30-year mortgage (360 months), but just finished year two (24 months), then you would have 336 payments remaining (assuming your payments are monthly like most mortgages).

And then there are a few more terms:

• Loan-to-value ratio –This is a measure of the size of the mortgage compared to the home's value and is directly affected by the size of your down payment. If you take out a $160,000 mortgage on a $200,000 home after making a $40,000 down payment, your loan-to-value ratio is 80%.
• Private mortgage insurance (PMI) – Lenders will typically require you to buy if your loan-to-value ratio is more than 80% – your down payment was less than 20% of the purchase price – and will continue to charge you this premium until it dips to 78%.
• Homeowner's insurance – Often bundled with mortgage payments, make sure you know your homeowner's insurance premium every month (or at least make an educated guess if you don't know it yet).
• Adjustments – If you've taken out an adjustable-rate mortgage, adjustments are how many percentage points your interest rate increases/decreases after a pre-determined period.

What Mortgage Calculators Do

Many would-be homebuyers turn to mortgage calculators to figure out just how much home they can afford.
The most common application is finding the estimated monthly payment for your new mortgage. These calculators run complex formulas to account for your principal, interest rate and loan length to determine how much you can expect to pay each month.

 Some calculators have features that show you how much interest you'll pay over the life of your mortgage. Unless you're paying for your house entirely in cash upfront, you might be surprised to see just how much more money an APR tacks onto your mortgage over time.
The most complex and detailed mortgage calculators will include variables for real world expenses like PMI, home insurance, property taxes and more. Others will include options for adjustable-rate mortgage changes as well. These can help you fine-tune your personal finance plans even further, and give you a comprehensive picture of financing a home.

How Calculators Can Save You Money

To be fair, lenders are required to abide by federal law and include a Good Faith Estimate and Truth-in-Lending disclosure when you sign for a loan. These documents reveal your mortgage's APR, finance charges, payment schedule and the total price tag of your loan, assuming you make the minimum monthly payments on time and in full.

However, if you're seeing all of that information for the first time when you sign the loan, then you haven't done your due diligence.
That's where mortgage calculators come in. They can help you understand the bulk of your financial obligations before you sign for the loan. And while good mortgage lenders won't pressure or coerce you into signing, seeing all that information for the first time right before you sign can be a bit overwhelming.
In addition, these calculators can help you compare the pros and cons of mortgages of lengths, terms and interest rates, to help you develop long-term plans for financing your home.

 

Mortgage for Refinancing

Mortgage Lenders for Refinancing

Mortgage refinancing involves taking out a new loan to pay off your existing home mortgage. As of April 2016, mortgage rates were hovering near record lows. Refinancing makes sense if you took out your existing mortgage when interest rates were much higher. For homeowners with good credit and payment histories, 30-year mortgages are available for under 4% interest, and 15-year mortgages are under 3%. If your current rate is 5% or above, you could save thousands of dollars refinancing even after accounting for various fees, such as mortgage origination and a home appraisal.

Another reason to refinance is if your current mortgage has an adjustable rate, meaning the interest rate goes up and down based on economic conditions. These loans sound attractive when you take them out, as their initial monthly payments are usually lower than a comparable fixed-rate mortgage (FRM). However, adjustable-rate mortgages (ARMs) often come back to bite borrowers later, not to mention you lack the security that comes with knowing your payment will never increase. When market rates are at record lows, it makes financial sense to refinance an ARM into an FRM. If you feel refinancing could benefit you, several companies stand out as offering not only the most competitive rates but also the best service and flexibility throughout the refinancing process.

Quicken Loans

Quicken Loans is a Detroit-based lender that has become a household name thanks to an impressive branding effort throughout the 21st century. The company is known for having competitive rates and several unique mortgage products not offered by its competitors. Its YOUR mortgage product offers repayment terms that you can customize beyond the typical 15- and 30-year mortgages provided by most companies. You can choose a term from eight to 30 years in one-year increments. This way you can lower your rate and payment while keeping the time remaining on your mortgage the same.
For borrowers who wish to refinance online without dealing with a salesperson, the Quicken Loans Rocket Mortgage makes this possible. Everything from the initial application and credit check to scheduling your home appraisal is done online. If you get stuck along the way, you still have the option of calling a toll-free number and speaking to a live loan officer. Market research company JD Power named Quicken Loans the number one mortgage company for customer satisfaction in 2015. As of April 2016, Quicken maintains an A-plus rating with the Better Business Bureau.

Guaranteed Rate

Guaranteed Rate is another company that emphasizes the ability for borrowers to conduct a refinance completely online. A unique benefit offered by the company is free credit reporting upon initial application. When you submit your information through the company's website or smartphone app, you receive your credit score from all three major bureaus for free. At this point, you can even choose your interest rate and fee structure based on what your credit qualifies you for and lock it in early in case rates increase. The company's status as an online lender means it has low overhead, and it passes these savings to its borrowers. Guaranteed Rate, as of 2016, was rated A-plus by the Better Business Bureau and received majority five-star reviews on finance and real estate websites such as Bankrate.com and Zillow.com.

loanDepot

LoanDepot is a direct mortgage lender, meaning the company itself provides the funds at closing rather than simply serving as a middleman that farms the loan out to a third-party company. There is one fewer person that has to be paid, which often translates to a better deal. Moreover, the company employs a no-steering policy, prohibiting its loan offers from trying to talk borrowers into a different type of loan to earn a bigger commission check. In addition to low rates, loanDepot gives prospective borrowers the ability to procure an interest rate quote instantly by filling out a simple form on its website. The company is rated A-plus by the Better Business Bureau.

 

Reverse Mortgage

 Reverse Mortgage
 What is A Reverse Mortgage
 A reverse mortgage or home equity conversion mortgage (HECM) is a type of home loan for older homeowners (62 years or older) that requires no monthly mortgage payments. Borrowers are still responsible for property taxes and homeowner’s insurance. Reverse mortgages allow elders to access the home equity they have built up in their homes now, and defer payment of the loan until they die, sell, or move out of the home. Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month. The rising loan balance can eventually grow to exceed the value of the home, particularly in times of declining home values or if the borrower continues to live in the home for many years. However, the borrower (or the borrower’s estate) is generally not required to repay any additional loan balance in excess of the value of the home.

 Specific rules for reverse mortgage transactions vary depending on the laws of the jurisdiction. For example, in Canada, the loan balance cannot exceed the fair market value of the home by law. One may compare a reverse mortgage with a conventional mortgage, where the homeowner makes a monthly payment to the lender, and after each payment, the homeowner's equity increases by the amount of the principal included in the payment. 
Regulators and academics have given mixed commentary on the reverse mortgage market. Some economists argue that reverse mortgages allow the elderly to smooth out their income and consumption patterns over time, and thus may provide welfare benefits.  However, regulatory authorities, such as the Consumer Financial ProtectionBureau, argue that reverse mortgages are "complex products and difficult for consumers to understand," especially in light of "misleading advertising," low-quality counseling, and "risk of fraud and other scams. Moreover, the Bureau claims that many consumers do not use reverse mortgages for the positive, consumption-smoothing purposes advanced by economists. In Canada, the borrower must seek independent legal advice before being approved for a reverse mortgage.

Mortgage Loan

What is a 'Mortgage 
A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large real estate purchases without paying the entire value of the purchase up front. Over a period of many years, the borrower repays the loan, plus interest, until he/she eventually owns the property free and clear. Mortgages are also known as "liens against property" or "claims on property." If the borrower stops paying the mortgage, the bank can foreclose.
A mortgage loan, also referred to as a mortgage, is used by purchasers of real property to raise funds to buy real estate; by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property. This means that a legal mechanism is put in place which allows the lender to take possession and sell the secured property ("foreclosure" or "repossession") to pay off the loan in the event that the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a "Law French" term used by English lawyers in the Middle Ages meaning "death pledge", and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure.  Mortgage can also be described as "a borrower giving consideration in the form of a collateral for a benefit (loan).

Basic Concepts And Legal Regulation
According to Anglo-American property law, a mortgage occurs when an owner (usually of a fee simple interest in realty) pledges his or her interest (right to the property) as security or collateral for a loan. Therefore, a mortgage is an encumbrance (limitation) on the right to the property just as an easement would be, but because most mortgages occur as a condition for new loan money, the word mortgage has become the generic term for a loan secured by such real property. As with other types of loans, mortgages have an interest rate and are scheduled to amortize over a set period of time, typically 30 years. All types of real property can be, and usually are, secured with a mortgage and bear an interest rate that is supposed to reflect the lender's risk.
Mortgage lending is the primary mechanism used in many countries to finance private ownership of residential and commercial property (see commercial mortgages). Although the terminology and precise forms will differ from country to country, the basic components tend to be similar:

• Property: the physical residence being financed. The exact form of ownership will vary from country to country, and may restrict the types of lending that are possible.
• Mortgage: the security interest of the lender in the property, which may entail restrictions on the use or disposal of the property. Restrictions may include requirements to purchase home insurance and mortgage insurance, or pay off outstanding debt before selling the property.
• Borrower: the person borrowing who either has or is creating an ownership interest in the property.
• Lender: any lender, but usually a bank or other financial institution. (In some countries, particularly the United States, Lenders may also be investors who own an interest in the mortgage through a mortgage-backed security. In such a situation, the initial lender is known as the mortgage originator, which then packages and sells the loan to investors. The payments from the borrower are thereafter collected by a loan servicer.
• Principal: the original size of the loan, which may or may not include certain other costs; as any principal is repaid, the principal will go down in size.
• Interest: a financial charge for use of the lender's money.
• Foreclosure or repossession: the possibility that the lender has to foreclose, repossess or seize the property under certain circumstances is essential to a mortgage loan; without this aspect, the loan is arguably no different from any other type of loan.
• Completion: legal completion of the mortgage deed, and hence the start of the mortgage.
• Redemption: final repayment of the amount outstanding, which may be a "natural redemption" at the end of the scheduled term or a lump sum redemption, typically when the borrower decides to sell the property. A closed mortgage account is said to be "redeemed"

Many other specific characteristics are common to many markets, but the above are the essential features. Governments usually regulate many aspects of mortgage lending, either directly (through legal requirements, for example) or indirectly (through regulation of the participants or the financial markets, such as the banking industry), and often through state intervention (direct lending by the government, by state-owned banks, or sponsorship of various entities). Other aspects that define a specific mortgage market may be regional, historical, or driven by specific characteristics of the legal or financial system.

Mortgage loans are generally structured as long-term loans, the periodic payments for which are similar to an annuity and calculated according to the time value of money formulae. The most basic arrangement would require a fixed monthly payment over a period of ten to thirty years, depending on local conditions. Over this period the principal component of the loan (the original loan) would be slowly paid down through amortization. In practice, many variants are possible and common worldwide and within each country.
Lenders provide funds against property to earn interest income, and generally borrow these funds themselves (for example, by taking deposits or issuing bonds). The price at which the lenders borrow money therefore affects the cost of borrowing. Lenders may also, in many countries, sell the mortgage loan to other parties who are interested in receiving the stream of cash payments from the borrower, often in the form of a security (by means of a securitization).
Mortgage lending will also take into account the (perceived) riskiness of the mortgage loan, that is, the likelihood that the funds will be repaid (usually considered a function of the creditworthiness of the borrower); that if they are not repaid, the lender will be able to foreclose on the real estate assets; and the financial, interest rate risk and time delays that may be involved in certain circumstances.

Mortgage Lenders

Mortgage Lenders
Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lender's rights over the secured property take priority over the borrower's other creditors which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.
In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds
to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. An alternative to mortgages that meets the requirements of Sharia (Islamic law), is the Islamic mortgage. Sharia prohibits interest, so Islamic mortgages are structured to avoid it by using other strategies such as markup of the purchase price.