Mortgage Calculators and the Questions They Address
The professor's 53 tested mortgage calculators cover refinancing, payments, points, term, early payoff, amortization, cost comparisons, APR, mortgage insurance, and more.
Borrowers contemplating a refinance want to know whether the financial gain from a lower interest rate more than offsets the refinance costs; whether it is cheaper to raise cash through a refinance than through a second mortgage; whether the cost of refinancing an ARM into an FRM is justified by the reduction in risk; and whether paying down the loan balance in order to lower the refinance cost is a good investment; and whether it pays to consolidate short-term debt into a refinance.
Borrowers use mortgage payoff calculators to learn how different extra payment plans will affect the payoff date, the total amount of interest they will have to pay, when their equity in the property reaches some specified level, and more.
Borrowers use mortgage payment calculators to find the payments on FRMs and ARMs of different types and/or carrying special options, such as payment options or temporary buydowns.
Borrowers use amortization calculators to monitor their progress in paying down the loan balance and increasing their equity, to see how the process would be affected by extra monthly payments or biweekly payments, and to check their tax savings.
Home buyers may use a calculator to determine how much they can afford to spend and whether they should buy now or wait, while home sellers can fashion lease-to-own offers.
Borrowers choosing between different mortgages, including fixed-rate and ARMs, can use these calculators to compare future values or net cost.
Borrowers choosing between different mortgages, including fixed-rate and ARMs, can use these calculators to compare their interest cost.
Borrowers with substantial amounts of short-term debt may use consolidation calculators to determine whether and how best to consolidate the debts in a mortgage.
Borrowers putting less than 20% down may use mortgage insurance calculators to decide whether to purchase mortgage insurance, the best premium plan, and how long they will have to pay it.
Borrowers with an opportunity to pay points to reduce the interest rate can use these calculators to find the break-even period, or the rate of return on investment.
Borrowers can use these calculators to find the rate of return on an increase in down payment, whether cash is better used for down payment than for points, and whether cash for settlement costs is better raised from the home seller or the lender.
Borrowers can use these calculators to determine whether a second mortgage "piggyback" is less costly than mortgage insurance or a jumbo first mortgage, or to compare two piggybacks.
Borrowers can use these calculators to explore how the term together with the interest rate affect the mortgage payment, and to determine whether a shorter term is a good investment.
Borrowers can use an APR calculator to estimate lender fees whereas lenders use them to make sure their APR disclosures are correct.
Seniors can use this calculator to compare different ways to borrow against the equity in their homes, with no obligation to repay as long as they live in the home.