*******

# Mortgage Calculator

## Borrowing Power

• Your borrowing power is the amount you can afford to borrow from the bank for a mortgage loan, also known as buying power. Since there are many variables it’s difficult to give you an exact figure such as \$200,000. The home you find will vary in price based on negotiations, your taxes will vary, there may be a land lease or condo fee and the interest rate may go up or down by the time you purchase. Keeping that in mind, try to find homes that you like with low taxes and a low condo fee because it will increase your available mortgage amount. You can calculate your borrowing power with a mortgage calculator above.

Monthly loans include your car loan, school loan, credit card monthly payment, personal loans and all other loans you pay on a monthly basis. The bank will not let your new mortgage payment and monthly taxes go above that calculated amount.

## Debt to Income Ratio

Remember to include your new monthly mortgage payment and monthly taxes. You do not have to include monthly expenses such as heat, electric and groceries, only the official loans that show up on your credit report.

## Amortization Schedule

1. Fill in your mortgage information
2. Click the Breakdown tab on the right
3. P = Principal and I = Interest
4. P + I = Monthly mortgage payment (The total will always be exactly the same)
4. Try lowering your loan term to 15 years from 30 years to see how much the Principal increases

## Interest Rates

• ### Interest Only Mortgage

• An interest only mortgage avoids principal payments for 5 years. Your payment will be significantly lower for the first 5 years of the mortgage loan. However, at the end of 5 years you still owe the full amount of the mortgage you signed your name to. At that point, your full mortgage amount needs to be paid over 25 years, which means your payment will be higher than what it would have been if you opted into a fixed rate mortgage.

Interest only loans operate with adjustable interest rates as well. After the 5 year mark you will be subject to an increased or decreased interest rate.

## Monthly Mortgage Payment

### Interest Amount

• When you make your 1st mortgage payment you’re paying 5% on \$200,000 (\$833.33). After you payment clears the loan balance lowers from \$200,000 to \$199,500, or so. Therefore, your 2nd mortgage payment will be 5% on \$199,500 (\$831.25). It will continue to lower each month which changes the amount of interest each time.

### Down Payment

1. 20% of your mortgage loan is paid down from the original purchase price
2. Your home appreciates in value, you prove it with an appraisal, and your loan is less than 80% of the appraisal amount

Mortgage loans are obtained every day with 3-5% down payments, but don’t forget closing costs. If your down payment amount is tight, try to negotiate them into your Purchase and Sale agreement. After you’ve gone back and forth, accept your seller’s offer with one exception, \$5,000 of the sale price goes towards closing costs.

• A 20% down payment is necessary to avoid PMI (Private Mortgage Insurance). Unfortunately, there are no magic tricks. Banks used to offer “piggy-back” loans as a loop hole, but they’re aren’t offered by many anymore. See more under Down Payment above.
• ### Add Principal to Monthly Payment

• Use the calculator below to see how many years get chopped off your mortgage loan when you add a few dollars to your monthly payment. You can send additional principal payments to the same address you send your mortgage payment. It’s helpful to include a memo note on the check, “Principal Payment Only”, but it’s not necessary.

## Types of Loans

### Credit Card

• A credit card is considered a loan because you’re able to access the total available credit at any point in time. Once you use the funds you can pay the bill within 30 days without any interest charges. However, if you decide to only pay the minimum payment, you’ll be charged interest between 12% and 25% annually.

## It’s Easy To Get A Personal Loan

### Home Equity Loan

• If you have an IRA or 401K you can give yourself a loan and pay yourself back with interest. You can apply for the loan through the financial institution that holds your IRA account. Typically, you can get a loan for up to 50% of the total amount and pay it back over 1-5 years.

If you default on the loan, it will be as if you simply withdrew money. That means you’ll need to pay taxes and pay a 10% penalty fee for withdrawing your funds before you’re 65 years old.

### Trusted PayDay Loan

• Risky, risky, risky!Trusted PayDay loans are short term loans that should only be used to cover yourself until you get paid next week or next month. They can’t be scheduled out for more than 3 months and monthly payments aren’t the way of paying off these loans. If approved, you’ll be given a chunk of money up to \$1,000 and it needs to be paid, in full with interest, before the expiration date. Read the fine print to see what penalties you’ll be given for defaulting.

## Get approved up to \$1000 instantly at TrustedPayDay.com!

### Quick Cash Loan

• Risky, risky, risky! Quick Cash loans are short term loans that should only be used to cover yourself until you get paid next week or next month. They can’t be scheduled out for more than 3 months and monthly payments aren’t the way of paying off these loans. If approved, you’ll be given a chunk of money up to \$1,000 and it needs to be paid, in full with interest, before the expiration date. Read the fine print to see what penalties you’ll be given for defaulting.

## Quick Cash When You Need It Most!

• Risky, risky, risky! Cash Advance loans are short term loans that should only be used to cover yourself until you get paid next week or next month. They can’t be scheduled out for more than 3 months and monthly payments aren’t the way of paying off these loans. If approved, you’ll be given a chunk of money up to \$1,000 and it needs to be paid, in full with interest, before the expiration date. Read the fine print to see what penalties you’ll be given for defaulting.

### Check Into Cash

• Risky, risky, risky! Check Into Cash has short term loans that should only be used to cover yourself until you get paid next week or next month. They can’t be scheduled out for more than 3 months and monthly payments aren’t the way of paying off these loans. If approved, you’ll be given a chunk of money up to \$1,000 and it needs to be paid, in full with interest, before the expiration date. Read the fine print to see what penalties you’ll be given for defaulting.

## Real Estate Investing

• Before buying your first home you should scroll up and view Borrowing Power and Debt to Income Ratio to see how much you can afford. The amount you can afford increases when your interest rate lowers. It also increases when your taxes, condo fee and insurance payments are lower. Your mortgage payment is the largest portion of the bills associated with your new home, however you should still pay close attention to the rest of the fees.

As you can see, both scenarios equal the same total monthly payment. However, Home Option 2 gives you a more expensive home. You may not always be able to find homes with cheap taxes and condo fees, but it’s important to understand during your search for a home.

### Buying 2nd Home / Investment

1. 1. 20% down payment: (5% if you move in at closing)
2. 2. 6 months of reserves: 6 months of your mortgage payment and monthly taxes need to be in an IRA or savings account
3. 3. Cannot include potential rent even if you have a signed lease: Rental income is only included as personal income when it’s been rented for more than 6 months.
4. 4. Subject to a higher interest rate for investment properties

• Buying a foreclosure takes time but you could save a lot of money. A foreclosure is owned by the bank and they’re ready to sell it as soon as possible! Don’t get it confused with a short sale. A short sale property is still owned by the seller and they’re trying to sell the property for less than they owe the bank, hence “short sale“. Purchasing a foreclosure is much easier because the bank owns it and you negotiate with the bank directly. They may take some time to answer you, so make you best offer the first time around.

• Is buying better than renting? Sometimes, but not always. Renting can prove to be cheaper if you like to move around a lot. In order to buy a home and sell it for a profit, you’ll have to live there for at least 5 years. Even after the 5 year mark you’ll be subject to appreciation or depreciation, which means the home will be worth more or less at the time you sell. Hopefully more.

The onlysavingsthat will come from owning a home is the principal portion of the mortgage payment. Everything else is wasted just like a rental payment. Appreciation can also play a big factor in a good economy, but it’s hard for a home to appreciate enough for you to turn a profit after living there for only 5 years.

Real estate is a long term investment. Buying a home and living in it for many years will prove to be much smarter than renting for many years. However, there are a lot of variables to consider before deciding which option is less expensive if your term of years is less than ten.

Remember, owning a home is a luxury that you can consider an expense compared to renting an apartment. If you end up exactly even after 5 years of owning a home, just realize that you lived in a home for 5 years instead of renting an apartment.

### Property Management Company

1. List your property on the MLS

You can’t do this on your own, you need a real estate agent first. It will cost money (usually 50%-75% of the 1st month’s rent), but they also show your property to potential tenants, run credit checks, and help you prepare it for showings. You’re only other option is to list it in local newspapers or a few online sites and hope that your potential tenants are using those sources.

2. Sign an official lease stating all stipulations of the agreement

It’s possible to find a good template online to use, but real estate agents have specific pieces of information that they include in each town for eviction purposes in case something goes wrong. Once your tenant is in place the property management company can charge you about 10% of the monthly rent to handle any phone calls regarding any issues the tenant is having. You can also opt out of that option if you want to collect the entire rental income.

3. Quick and clean eviction

If you end up in court it helps to have a lease created and signed by a 3rd party. Real estate agents also have up-to-date lease agreements that hold up well in court, where your template lease may not. Professionals have been through the process plenty of times and know exactly when to submit each piece of information to the court in order to get the best results.

I have 4 properties and I use a property management company for the 3 that I lease.

*******
SOURCE: http://www.thefreemortgagecalculator.com/