Mortgage calculator

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Mortgage calculator is an automated tool that allows users to define the financial implications of changes in one or more variables in a mortgage financing arrangement. Mortgage calculators are used by consumers to determine monthly payments, and by mortgage providers to determine the financial suitability of home loan applicants.

The main variables in mortgage calculations include loan principal, balance, periodic compound interest rate, amount of payments per year, amount of payment and amount of regular payments. More complex calculators can take into account other costs associated with mortgages, such as local and state taxes, and insurance.

The ability of mortgage calculations can be found on financial finance calculators such as HP-12C or Texas Instruments IT BA II Plus. There are also some free online free mortgage calculators, and software programs that offer financial and mortgage calculations.

Video Mortgage calculator

Usage

When buying a new home, most buyers choose to finance a portion of the purchase price through the use of a mortgage. Before the availability of mortgage calculators, those wishing to understand the financial implications of the five major variables changes in mortgage transactions were forced to use the compound interest table. These tables generally require a working understanding of the mathematics of compound interest for proper use. Instead, the mortgage calculator makes the answer to the question of the impact of changes in mortgage variables available to everyone.

The mortgage calculator can be used to answer questions such as:

If a person borrows $ 250,000 at an interest rate of 7% per annum and pays back the loan for more than thirty years, with an annual property tax payment of $ 3,000, an annual property insurance fee of $ 1,500 and a private mortgage insurance payment of 0.5% per annum , what will be the monthly payment? The answer is $ 2,142.42.

A potential borrower can use an online mortgage calculator to see how much property he can afford. The lender will compare the total of one's monthly income and total monthly debt burden. The mortgage calculator can help add to all sources of income and compare it with all monthly debt payments. This can also be a factor in potential mortgage payments and other related housing costs (property taxes, home ownership fees, etc.). Ordinary mortgage calculators do not include costs such as maintenance fees, repairs, landlord insurance, and other additional costs such as service fees, property management fees, etc. One can test various loan sizes and interest rates. In general, lenders do not like to see all debt payments of borrowers (including property costs) exceeds about 40% of total income before taxes. Some mortgage lenders are known to allow as high as 55%.

Maps Mortgage calculator

Monthly payment formulas

Fixed monthly payments for a fixed-rate mortgage are the amounts paid by the borrower each month to ensure that the loan is repaid at interest at the end of the semester. The monthly payment formula is based on the annuity formula. The monthly payment c depends on:

• r - the monthly interest rate, expressed as a decimal instead of a percentage. Since the annual percentage rate quoted is not a compound level, the monthly percentage rate is only the annual percentage divided by 12; divide the monthly percentage rate by 100 gives r , the monthly rate is declared as decimal.
• N - monthly payment amount, called loan term , and
• P - the amount borrowed, known as the principal of the loan .

Dalam perhitungan standar yang digunakan di Amerika Serikat, c diberikan oleh rumus:

${\ displaystyle c = {\ begin {cases} {\ frac {rP} {1- (1 r) ^ {- N}}} = {\ frac {rP (1 r) ^ {N}} {(1 r) ^ {N} -1}}, & amp; r \ neq 0; \\ {\ frac {P} {N}}, & amp; r = 0. \ end {cases}}}  ÂÂ$

Misalnya, untuk pinjaman rumah sebesar $ 200.000 dengan suku bunga tahunan tetap sebesar 6,5% selama 30 tahun, kepala sekolah adalah ${\ displaystyle P = 200000}  ÂÂ$ , tingkat bunga bulanan adalah ${\ displaystyle r = (6.5/12)/100}  ÂÂ$ , jumlah pembayaran bulanan adalah ${\ displaystyle N = 30 \ cdot 12 = 360}  ÂÂ$ , pembayaran bulanan tetap sama dengan $ 1,264.14. Formula ini disediakan menggunakan fungsi keuangan PMT dalam spreadsheet seperti Excel. Dalam contoh, pembayaran bulanan diperoleh dengan memasukkan salah satu dari rumus ini:

= -PMT (6.5/100/12, 30 * 12, 200000)

= ((6.5/100/12) * 200000)/(1 - ((1 (6.5/100/12)) ^ (-30 * 12)))

= 1264.14

The monthly payment amount at the end of the month N applied to the principal payment equals the amount of c the payment minus the amount of interest currently paid on the pre-existing unpaid principal. The final amount, the interest component of the current payment, is the interest rate r times the unpaid amount at the end of N -1 month. Because in the early years of the mortgage, the outstanding principal is still large, as is the interest payments on it; so that the portion of the monthly payments to pay is substantially small and the equity in the property accumulates very slowly (in the absence of changes in the market value of the property). But in the subsequent years of the mortgage, when the principal has been paid substantially and not much monthly interest has to be paid, the bulk of the monthly payments are for the repayment of the principal, and the remaining principal decreases rapidly.

The borrower's equity in the property is equal to the current market value of the property minus the amount owed according to the above formula.

With fixed rate mortgages, the borrower agrees to pay the loan fully at the end of the loan term, so the amount due in the month N should be zero. To make this happen, the monthly payment c can be obtained from the previous equation to obtain:

<                       1                                             r                                                 N                                                                                      Â



















<                       1                                             r                                                 N                                                                     -                       1                                                                       P                                                                                                                                   =                                                       r                                           1                       -



















<                       1                                             r                                                 -                           N                                                                                                                     P                                                           {\ displaystyle {\ begin {aligned} c & amp; {} = {\ frac {r (1 r) ^ {N}} {(1 r) ^ {N} -1}} P \\ & amp; {} = {\ frac {r} {1- (1 r) ^ {- N}}} P \ end {aligned}}}  Â

which is the formula provided initially. The derivation illustrates three major components of fixed-rate loans: (1) monthly repayment depends on the loan amount, the interest rate, and the length of the loan repay- ment; (2) the amount paid per month is equal to the outstanding amount of the preceding month plus such an interest, minus fixed monthly payments; (3) monthly payments are still selected so that the loan is fully paid off at interest at the end of the term of office and no more money is due.

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Adjustable Interest Rate

Although adjustable interest rate mortgages have existed for decades, from 2002 to 2005 customized mortgages have become more complicated as are the calculations involved. Loans become much more creative that complicates calculations. Subprime loans and creative loans such as "select payment", "payment options", and "hybrid" loans bring in a new era of mortgage calculations. Creatively adjusted creditor means some changes in the calculations to specifically deal with this complicated loan. To calculate the annual percentage rate (APR), many variables need to be added, including: initial interest rate; the length of time at that level; rearrangement; change of payment; Index; margin; caps of periodic interest change; payment caps; lifetime cover; close negative amortization; and others. Many lenders are creating their own software programs, and World Savings has even contracted special calculators to be made by Counted Industries for the "select payment" program. However, by the end of the 2000s the Great Recession ended many of the many creative "payment" loans that made many borrowers have higher loan balances over time, and owed more than their home values. It also helps reduce the more complicated calculations that accompany this mortgage.

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Total Interest Paid Formulas

Jumlah total minat ${\ displaystyle I}  ÂÂ$ yang akan dibayar selama masa pinjaman adalah selisih dari jumlah total pembayaran ( ${\ displaystyle cN}  ÂÂ$ ) dan pokok kredit ( ${\ displaystyle P}  ÂÂ$ ):

${\ displaystyle I = cN-P}  ÂÂ$

di mana ${\ displaystyle c}  ÂÂ$ adalah pembayaran bulanan tetap, ${\ displaystyle N}  ÂÂ$ adalah jumlah pembayaran yang akan dilakukan, dan ${\ displaystyle P}  ÂÂ$ adalah saldo pokok awal pada pinjaman.

The cumulative interest paid at the end of each N period can be calculated by:

${\ displaystyle (Pr-c) {\ frac {((1 r) ^ {N} -1)} {r}} cN}  ÂÂ$

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Di luar AS.

In the United Kingdom, the FCA - the Financial Conduct Authority (formerly OJK - the Financial Services Authority) arranges loans obtained from residential property. He does not prescribe any particular method of calculation, but he formulates that for compentative purposes, the lender must display Annual Percentage Values ​​(equally prominent with other rates).

In Spain, the regulatory body (Banco de EspaÃÆ' Â ± a) has issued and enforced some good practices, as it clearly advertises Annual Percentage Values ​​and states how and when payments change in a variable rate mortgage.

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See also

• Bridge financing
• Funding
• fixed rate mortgage
• Mortgages with adjusted interest rate
• Mortgage loan
• Promissory note
• The origin of the credit
• Subprime Loans

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References

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External links

• Mortgage Calculator at NYTimes.com

Source of the article : Wikipedia