You can easily use this chart to calculate a monthly mortgage payment for any mortgage amount.

For example, if you are borrowing $70,000 at 8% for 15 years, your monthly payment would be:
70 X $9.56 = $669.20  (Scan down the chart for a 15 year loan until you intersect with the 8.00% interest line.  In this example, the monthly payment for $1,000 @ 8% interest for 15 years is $9.56)  It is just that simple


Interest          15 Year           30 Year          
 Rate               Loan              Loan

4.00                 $7.40               $4.77
4.25                 7.52                 4.92
4.50                 7.65                 5.07
4.75                 7.78                 5.22

5.00                 7.91                 5.37
5.25                 8.04                 5.52
5.50                 8.17                 5.68
5.75                 8.30                 5.84

6.00                 8.44                 6.00
6.25                 8.57                 6.16
6.50                 8.71                 6.32
6.75                 8.85                 6.49

7.00                 8.99                 6.65
7.25                 9.13                 6.82
7.50                 9.27                 6.99
7.75                 9.41                 7.16

8.00                 9.56                 7.34
8.25                 9.70                 7.51
8.50                 9.85                 7.69    
8.75                 9.99                 7.87

Interest          15 Year           30 Year
Rate                Loan               Loan

9.00                 $10.14             $8.05
9.25                 10.29               8.23
9.50                 10.44               8.41    
9.75                 10.59               8.59

10.00               10.75               8.78
10.25               10.90               8.96
10.50               11.05               9.15
10.75               11.21               9.33

11.00               11.37               9.52
11.25               11.52               9.71
11.50               11.68               9.90
11.75               11.84               10.09

12.00               12.00               10.29
12.25               12.16               10.48
12.50               12.33               10.67
12.75               12.49               10.87

13.00               12.65               11.06
13.25               12.82               11.26
13.50               12.98               11.45
13.75               13.15               11.65



The Mortgage Summary Chart
 


Type

Definition

Advantages

Disadvantages

Notes


30 Year Fixed

 

 

 

Fixed monthly payments over  30 years

 

>Fixed payment
>Interest rate       never increases

 

 

>30 year payoff
>Pay more for interest
> Interest rate usually higher than 15 year or ARM

 

The 30 year fixed mortgage is the most common mortgage.

 

15 Year Fixed

 

Fixed monthly payments over 15 years

 

>Fixed payments
>Interest rate never increases
>Interest rate usually lower than 30 year
>Pay less in interest 
>Debt free in 15 years

 

>Higher monthly payment

 

If you can afford the payment, this is a good option!

 

ARM
Adjustable Rate Mortgage

 

Interest rate usually adjusts each year based upon current rates

 

>Lower payments for first year

 

>Interest rates are not locked in
>Payments could greatly increase

 

 

Typically can only increase 2% per year with lifetime cap of 6% increase

 

FHA

 

Federal Housing Administration/
Govt. insured  or backed

 

>Allows low down payment
> 3% to 5%

 

>Limits on amount you can borrow

 

Great option for buyers with little down payment

 

VA

 

Veterans Administration
Govt. insured  or backed

 

>Allows low down payment

 

>Limits on amount you can borrow

 

Must have past military service to qualify

 

Biweekly Mortgage

 

1/2 of monthly mortgage payment is made every two weeks

 

>Saves thousands in interest
>Eliminates years off mortgage

 

>More cash required
>Like making 13 payments each year

 

Most banks do not offer biweekly payment plans

 

Reverse

 

Lender makes payments to you each month

 

>Helps senior citizens obtain monthly income from equity built up in  home

 

>All equity in home can be consumed over the years.

 

Must be 62 to qualify.  Some lenders require family members to attend seminar.

 

Home Equity

 

Loan for up to 80% of equity in home.

 

> Interest can be deducted

 

> Consumes equity in home
> Increased debt

 

Be careful to understand repayment plan


New Mortgage Checklist

General Questions For All Mortgages

Find out the answer to these questions as soon as possible.  If you wait until right before closing, your options become limited and you will be forced to accept the lenders terms -- even if you don’t like them!  It’s best to agree upon the closing cost and interest rate at the beginning rather than at the end of the process.  If you believe the interest rate  or closing cost are too high, you need time to shop around.

  • What will my monthly payments be for principal and interest?
  • Do you require an escrow account for taxes and insurance?
  • If yes, how much will I need to pay into the escrow account each month?
  • What is my APR, annual percentage rate?
  • When is the loan payment due each month?
  • Do you allow any grace days if I am late?
  • What is your late payment penalty?
  • Is the loan assumable by another person at the same interest rate or at current rate?
  • Is there any penalty for pre-payment?
  • Can I pay off the loan balance at any time without a penalty?
  • Can I make a pre-payment at anytime during the month or only with my monthly payment?
  • What are my expenses related specifically to my loan (what are my closing costs)?
  • What items must I prepay and how much will it cost me (insurance, taxes, interest, etc.)?
  • Can I lock in my interest rate? Is there a charge for locking in my rate?  What are my options if interest             rates decrease between the time I lock it in and we close?
  • How long will my loan approval take?
  • Does my mortgage have a call option? (Can the lender require me to pay the remaining balance on my loan before the full term of the loan has expired?) (This would be very unusual, but it doesn’t hurt      to ask.)

 

In addition to the above question, these questions relate specifically to Adjustable Rate Mortgages:

  • What is the interest rate for the first year?
  • What is the annual interest rate increase limit ( usually 1%  or  2%)?
  • What is the life time interest rate cap (usually 5%  or 6%)?
  • What index is my new interest rate tied to  (Prime rate, One Year T-Bill, One Year CD)?
  • When will the interest rate be evaluated/adjusted each year?
  • Where can I find information about the index you will be using  (Newspaper)?

If I Were Buying A Home


Here are what I believe the top ten guidelines for first (or any) home buyers.

  1. Buy  a home with a mortgage you can pay off in 15 years.
  2. Don’t buy a home that will stretch your budget to the max every month.
  3. If married, buy a home using only one income to qualify
  4. Buy a home you are confident that has resale value.   Location always has a lot to do with resale.
  5. Be sure that you have enough money after closing in order to pay for repairs and decorations.
  6. Buy a home only if  you are fairly confident you can live in it for a least 2 years.
  7. If you are not a handy man or woman, don’t buy a home that needs lots of repairs.
  8. Buy a home that is practical and will meet your needs.
  9. Try to buy a home in the neighborhood at the lower or average price verses buying the most expensive            house in the area.  You are more likely to increase the value of your property when you do any repairs.
  10. Search for the lowest interest rate.

Definitions

Adjustable Rate Mortgage:  Commonly known as an "ARM".   Interest rate is not fixed, but can be adjusted up or down every six months or year based on a pre-determined index.

Amortization Schedule: Schedule listing amount due for interest and principal reduction each month.  Also includes date due, interest rate, monthly payment amount, and balance due after each payment.   The word amortize means “to put to death”.   Therefore, as you are making each payment, you are putting your loan to death.

Cap:  The lifetime limit as to how high an interest rate can go for an adjustable rate mortgage.  For example some adjustable rate mortgages might have a lifetime cap of 12%.  Common caps for adjustable rate mortgages are 2% per year and lifetime cap of 6% over original interest rate.

Equity:  The market value of your property minus any loans you have on the property.  If the market value of your home is $100,000 and the present amount you own on you mortgage is $60,000,  your equity is $40,000.  ($100,000 - $60,000 = $40,000)

Fixed Rate Mortgage:  Mortgage in which the interest rate (and monthly payment for principal and interest) remain constant for entire life of the loan.

PITI: Commonly used to refer to principal, interest, taxes and insurance.  Typically these four ingredients make up a monthly mortgage payment.

Point:    A point is equal to 1% of the loan amount.  Some lenders will have you pay a “point” as the loan origination fee.  One point for a loan of $75,000 is $750.  ($75,000 X 1% = $750)

PMI: Private mortgage Insurance - if your down payment is 20% or less lenders will require you buy mortgage insurance.   (VA and FHA loans have federal mortgage insurance.)  You generally pay 1% to 1.25% of the mortgage amount up front, plus a monthly fee.  Generally you will have to pay PMI until your equity equals 20% or more.  This insurance is used to protect the lender in case you default on the loan.

Prepaying:  When an individual makes mortgage payments in addition to amount due.   One hundred percent of prepayment amount is used to reduce mortgage loan balance.

Refinancing:  Obtaining a new mortgage for your property.  Generally an individual would consider refinancing if interest rates have dropped at least 2%.