Your Questions About Mortgage Loan Calculator

Mary asks…

How to compute for the full payment of a housing loan acquired through a 5 year bank financing?

Let say, I have been regularly paying my 5 year housing loan through bank for 35 months at Php20T per month. Then I want to pay it in full on the 36th month. The interest rate is 16% per year. Will there be a discount? How much?

John answers:

Look over your Loan Documents to make sure that you do not have any pre-payment penalty… Go to www.bankrate.com and use the mortgage calculator to determine how soon you’ll be done making your payments and becoming the Official Owner of your property.

Mandy asks…

where can I find the mathematical computations for basic mortgages and home ownership?

I want to purchase a home, and have difficulty figuring out PMI, my monthly mortgage and additional fees.
Can you show me where to find some basic info and/or training on how to best learn the basics?
I need to learn to find out the bottom line 😉
thanks !

John answers:

To figure out a mortgage payment you want to go to http://globalmortgageteam.net/calculator.php?id=31.

This will help you figure out your monthly payment. To figure out monthly mortgage insurance is take your loan amount and times it by .35. To figure out FHA financed mortgage insurance the loan amount is mulitplied by 1.5.

Other fees are based on the lender, title insurance company, broker and appraisal. Also, calculate your taxes and insurance into the monthly payment to find out your total payment.

For example:

Monthly payment is 919
Taxes 291
Insurance 75
PMI 42.44

Total $1,327.44

The above is for illustration purposes only. All scenarios will differ in rate, taxes, insurance and home values.

Carol asks…

Is it possible to get a mortgage with a high debt to income ratio?

I am a first time buyer and my loan officer is having a hard time finding a lender that will accept my DTI. I have a $330 car payment and like $6k in student loans. If i did the calculations right, then my DTI is 48%. With a DTI at 48%, is there even a chance that I can be approved?? I am getting a 203k FHA loan for the house that is $100k.

John answers:

Every loan program has their own DTI range the borrower must fall into. There is no way around this anymore. In the old days there was a way around this but the majority of those borrowers have lost their properties to foreclosure. Now a days banks simply don’t allow you to borrow more money than you can afford to repay and still pay off your present creditors and Uncle Sam. FYI when you figure your DTI you don’t include rent and utilities, just the minimum payments of the creditors you owe over time. Yahoo has a great calculator to help you figure this out. Good Luck

Charles asks…

How do lenders come up with the interest rates for mortgages?

I want to know how banks set the interest rates for mortgages. All I know is that they move up and down with the fed funds rate and discount rate (Correct me if I am wrong). Does anyone know all factors that play into the rates that lenders come with? Is there a way to calculate or give more or less weight to any one of them? Thank you.

John answers:

That is not to say that when the fed lowers rates the mortgage rates don’t tend to fall slightly but not in unison.

The question i think you want to know is why the rate quotes differ so much does. The fact is all mortgage professionals are finding rates from the same pond so to speak.
Lenders and brokers have rate sheets it shows the rates that would be available to you what most people don’t know….simply put it shows the rate with the borrower paying no points to get a lower rate and then the other which is it shows the lender or broker your rate that would pay him a yield spread! 1/2% of loan amount to as much as 3% of your loan amount

And in some cases the borrower has no idea of this! Or it is explained away when you see a high APR by saying the reason is because of the closing costs. Closing costs do move the apr higher but considering the apr is factored over the life of the loan 30 years or whatever your term is.

The term is yield spread or back end money. Most brokers and lenders even banks split the amount they want to make between the lender fee and yield spread so if a lender wants to make 3% then they show half in the front of 1 1/2 % lender fee.
Borrowers should always focus on the rate. It is unfortunate that so many brokers use the raising of rates to make more money and that doing this can cost the borrowers tens if not hundreds of thousands of dollars in added interest.

The simple fact is you need to use a loan comparison calculator to show the differences in loan offers. 1/2 % higher rate on a 30 yr fixed with a 250k home loan is 48,750 in additional interest!
Remember that the majority of the first 10 years of mortgage payments go toward the interest you owe!

HERE IS A CALCULATOR TO SEETHE BIG PICTURE

Mark asks…

How can I refinance my mortgage and save money?

I purchased my house in 2010 for 273k and currently owe 243k. The property is probably worth what i owe. I pay $202 in pmi per month.
Can I refinance to a 15 yr loan and eliminate my pmi? If so, how?

John answers:

Your ability to refinance will depend on a few factors such as the type of loan that you look for and your ability to qualify for a mortgage loan. In any case you will need mortgage insurance, but you still might be able to save money.

1. FHA Streamline: If you have a FHA loan and want to do a streamline refinance, then you will need to pay a large upfront mortgage insurance payment, as well as monthly mortgage payments, for at least 5 years. If your total housing payments do not decrease by at least 5%, then you will not be eligible for a 15-year mortgage.

2. Conventional loan refinance: If you have look for a conventional loan, then you will need mortgage insurance. If your loan to value ratio (LTV) is over 80% then you will need mortgage insurance. However, the mortgage insurance is automatically terminated when you LTV reaches 78% based on the value of the house at the time you took the loan and the original payment schedule.

If you can qualify for a 15-year refinance loan, which has much lower rates, then you will be able to cancel your PMI much quicker. Shop around and check the mortgage rates and mortgage fees, including lender fees and third party fees. Given today’s historically low rates, you might save money on the refinance. I recommend that you check out Bills.com mortgage refinance calculator, http://www.bills.com/calculator-mortgage/ and then get a mortgage quote.

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