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The Real Estate Update is a monthly newsletter with the latest real estate updates to stay informed on local market conditions.

Argyle & Southlake Real Estate & Homes For Sale

Specializing in Argyle and Southlake homes for sale and the Denton County Tarrant County real estate market, you have found your Realtor resource for buying and selling your next property. With real estate expertise for both purchasing and listing properties in Argyle, Southlake, Grapevine, Trophy Club, Denton, Roanoke and all surrounding Denton County Tarrant County, TX areas, you have found the right resource for all of your real estate needs. Whether you are looking for a new home or land, or you are in the preliminary stages of a real estate search, you have found the best in professional service.

Through this real estate web site, you have the ability to search virtually every home for sale in Argyle, Southlake, Grapevine, Trophy Club, Denton, Roanoke and all other local areas. In addition to accessing houses and real estate for sale, this web site features comprehensive community information for Denton County Tarrant County areas that can help guide you in making the right buying or selling decision.

Additional Denton County & Tarrant County real estate, home buying, and home selling tools

This web site features every real estate tool you need when looking at Argyle real estate and homes for sale. You can browse exclusive homes for sale, search virtually all Argyle area listings through my property search, calculate mortgage payments on your next home with my real estate mortgage calculators, access home buying and selling tips, get tremendous area information about greater Tarrant County including specific information for Argyle, Southlake, Grapevine, Trophy Club, Denton and Roanoke. Furthermore, you can find out how much your property is worth, and access comprehensive information about selecting me as your real estate agent. If you are interested in learning about Tarrant County, TX schools, this site also offers thorough school information.

Thanks again for visiting and be certain to contact the email or phone number number above for the best in professional real estate service.


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Balloon Loan Calculator

This tool figures a loan’s monthly and balloon payments, based on the amount borrowed, the loan term and the annual interest rate. Then, once you have calculated the monthly payment, click on the “Create Amortization Schedule” button to create a report you can print out.

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Everything You Need to Know About Balloon Mortgages

A Balloon mortgage is a loan that doesn’t wholly amortize over the life of the home loan, resulting in a balance at the conclusion of the term. Consequently, the final payment is substantially higher than the regular payments. Obviously, the majority of homeowners who choose this type of financing plan on either refinancing prior to the term ending, or selling the property. A balloon mortgage requires monthly payments for a period of 5 or 7 years, followed by the remainder of the balance (the balloon payment). The monthly payments for the time period prior to the balloon’s due date are generally calculated according to a 30 year amortization schedule.

Why a Balloon Loan?

A balloon mortgage is often chosen by individuals who want to have low, fixed monthly payments, with the end goal being to sell the property (often investment properties), at a profit prior to the balloon payment coming due.

What Are 15 Year Balloons Used For?

A 15 year balloon is a form of home loan in which the homeowner makes principal and interest payments for 15 years. Subsequently, at the conclusion of the 15 year term, they are required to pay the amount of money still owed. The 15 year has also become a preferred loan choice for a second mortgage in a piggyback agreement. It’s becoming more and more common for borrowers that put less than 20% down to opt for piggyback options instead of purchasing mortgage insurance. A piggyback can be a first mortgage for 80% of the home’s value and a second mortgage for 5% to 20% of value, depending upon how much the borrower puts down as a payment. In some cases the second mortgage is an adjustable rate; however an increasingly common option is the 15 year balloon.

Paying Off Your Loan Early Vs. Conserving the Money

Property owners who have the available resources to make a partial or full early payment on their balloon amount have the advantage of selecting from a number of different options. Your best option is dependent on your financial goals and any other investment or savings options you have. One of the main variables that determine whether it’s a better idea to pay off the balloon ahead of time is the interest rate on the loan in comparison to the interest that could be earned from investing the money elsewhere until the balloon is due. If the loan carries a higher interest rate, you would save money by paying the balloon off early. It’s important to keep in mind that an early balloon payoff requires that you pay not only the balloon amount, but any principal reduction that would be included in the regular monthly payments that are yet to be paid. One last consideration with investing or paying down your loan would be the tax implications. People in a higher tax bracket have to earn a significantly larger rate of return in the market for the after-tax returns to match the yield on paying off their debt early.

Refinancing a Balloon Mortgage When You’re Underwater

Commercial mortgage calculatorA mortgage debtor with a balloon balance higher than the property value faces challenging problems. Since no other lender will refinance an underwater home, either their current lender will need to refinance it or the homeowner will be pushed to default. In some cases an offer might be presented by the lender to extend the term of the loan for an additional 5 years at the same rate.

If you’re underwater, keep in mind that your current lender is aware that you don’t have any other option but to default, a fact that would inflict a substantial loss on the lender. A considerably better result from their standpoint would be to refinance which would keep your payments coming in and give you an opportunity to pay off your mortgage. In some cases the lender may be willing to modify the terms of your loan as well, relieving your payment problems. Basically, whatever deal emerges, you’ll be able to negotiate and if your lender understands that you see your choices as either defaulting on your mortgage or refinancing at terms you can handle, they’ll more than likely be reasonable.

Advantages Disadvantages

Advantages

If you’re wondering why a homeowner would decide on a balloon mortgage instead of a fixed or adjustable-rate mortgage, the answer is that balloon mortgage rates come at a discounted APR, making them a more affordable alternative early in the term. An example would be that if you don’t plan on keeping the property (or loan) for more than a few years, a balloon would be a viable option. That being said, there are always associated risks.

Disadvantages

The obvious negative aspect is the uncertainty at the conclusion of the loan term. For instance, after 7 years, the existing balance is owed. Just imagine if your property drops in value, leaving you owing more than the remaining balloon payment – you’d have a big problem on your hands if you can’t refinance or execute a short sale. This wouldn’t be the case if you had an ARM or fixed rate loan. ARMs may adjust higher, established by their caps which limit the amount the payments can rise, providing a certain level of protection. Even if you’re underwater on your loan, thanks to the caps, your payments will probably be manageable. Fixed rate home loans have the same payment throughout the life of the loan.

What is a Negative Amortization Balloon Mortgage?

Negative amortization develops when the monthly payment is less than the interest due which causes the loan balance to increase instead of decreasing. ARMs that permit negative amortization could increase the affordability of the home as well as provide lower interest rates, if the interest rates don’t rise consistently. As with just about everything else regarding finance, the benefits come with risks.

In conclusion

The most important thing you should do before you decide on a home loan is to evaluate all of your options and consult with a trusted mortgage broker/lender. You just might be surprised to find that today’s fixed rate loan rates may be better than a ARM or balloon mortgage and without as much risks.


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A Real-Numbers Breakdown of My Actual Mortgage Payment (and Why Online Calculators Can be Misleading),


A Real-Numbers Breakdown of My Actual Mortgage Payment (and Why Online Calculators Can be Misleading)

Any renter with an internet connection and a passion for painting the walls dark green (or black or maybe just wallpapering a bit) can attest to the bit of confusion you feel when first encountering a mortgage calculator or payment estimator online.

You approach the thing with some very rough estimates researched in haste about what a modest little 2-bedroom in an up-and-coming neighborhood might cost. You give a not-totally-inaccurate number of what kind of down payment you might have, but, yeah, it’s inflated just a little bit. (Maybe you’ll get better at saving soon.) You have no idea even what interest rate to enter—you’ve got pretty good credit but haven’t even gotten as far in this very informal home search as to google a little bit about rates—so you use the default one in the calculator. You push the button and find that the number it spits out for your future mortgage payment on your lovely little 2-bedroom condo on the East side of the city is. well, it’s doable. Too doable, you realize. Why isn’t everybody buying a home?

That number an online mortgage calculator will give you is just one piece of the full picture of what it costs, monthly, to buy a home. (This is to say nothing of the other expenses involved, like a down payment and closing costs, plus the ongoing maintenance of being king of your own domain.) The calculator is estimating just your principal and interest payment (“P I”) based on all the factors you punched in—that’s just what you have to pay back to the bank in exchange for them loaning you more money than you’ve ever seen in your life. On top of that there’s possibly mortgage insurance (if you’re making a down payment under 20 percent), and definitely homeowner’s insurance and taxes, which are likely collected in this thing called an escrow account where your lender collects the taxes and premiums from you and pays those bills on your behalf.

What an Actual Mortgage Payment Can Look Like

To show you how much those other expenses can add up on top of what seems like a doable number that the calculator gives you, I thought I’d share my actual mortgage, in very real numbers.

My husband and I bought a 2-bedroom loft in Atlanta last May, our first home after many years of renting both separately and together. A monthly mortgage payment involves lots of little forever-moving parts and pieces, but here is a snapshot of what our 30-year, fixed-rate mortgage payment looks like right now at almost one year in:

Monthly Escrow: $409, includes the below:

Homeowner’s Association Fees: $250 †

Total Payment Each Month: $2192

* We’ll own 20% equity in our home by November 2023, and that’s when PMI (private mortgage insurance) goes away. Until then, this is a necessary monthly expense for us.

This is technically not part of our mortgage payment, as it’s a separate bill that is paid to our loft’s association and not to our lender. But for our specific household budget, we keep this expense in the same bucket as our mortgage. If you’re thinking about the affordability of a condo, you need to factor this in, too.

Principal and Interest

In a fixed-rate mortgage, your P I payment (the figure most mortgage calculators tell you) will never change, although the proportions of it going respectively to paying the principal loan and interest will. Over the past 9 months, an average of $458 of our P I payment has been going to our principal, and $928 to interest. That ratio will consistently move more in our favor over time—though it does take a long time. We’ll be paying our principal loan down by about $500 per month after 3 years of owning our place, and it will take 20 years until we’re paying $1,000 a month towards the original loan.

So, yes, right now only 450-ish dollars of our $2,192 monthly housing expense is money we’re not “throwing away,” to use a phrase often cited by wary renters. That 20-ish percent of our total monthly housing expense is the only part going back into our pockets in the form of home equity. The rest is interest, plus the other taxes, insurance and fees.

Everything Else

The expenses beyond P I vary from place to place and buyer to buyer. Your mortgage insurance payment depends on your credit and the cost of your home, but you can estimate the total to be between 0.3 percent and 1.5 percent, annually, of the original loan amount. Homeowner’s insurance depends on how much you have to insure and how much coverage you need. And your property taxes just depend on where you live.

The parts of our monthly payment beyond principal and interest can (and likely will) go up over time. Maybe not as much as rent does, but still. Your housing costs as a homeowner are hardly a fixed expense.

Are Mortgage Calculators Accurate?

I mean, technically, yes. They’re accurate. They’re calculators. Even in an uncertain world, you can usually trust computers about numbers. But I think that online mortgage calculators can be seriously misleading in the early stages of buying a home.

As a renter, you have one big line item on your budget: rent. Your total housing expense is a round and uncomplicated number, possibly supplemented with a small amount for renter’s insurance and utilities, depending on how you budget. When you become a homeowner, your “mortgage” (in quotes) is the sum of all of kinds of related payments you make to your lender (and maybe your HOA) each month. But the actual mortgage (no quotes) is technically just that principal and interest part, and if you just swap out your rent for the new number on the mortgage calculator in order to figure out if homeownership is possible for you, you’re doing yourself a disservice by ignoring all the other expenses you’ll be on the hook for.

In order to get a better picture of your future as a homeowner, you’ll need to do a little more legwork. Research into property taxes in the area you’re looking to buy (a real estate agent can help with this), get a quote from a homeowner’s insurance company and, if you’re putting less than 20 percent down, use a PMI calculator to estimate what mortgage insurance might cost you.


Find the Best Arkansas Home Loan and the Best Home Loan Interest Rates from Riverside


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Riverside Bank (formerly known as Merchants Planters Bank) was chartered in Sparkman (Dallas County) Arkansas in 1916.

Eighty years later, in 1996, the Bank expanded into Central Arkansas with a loan production office and mortgage company subsidiary (Riverside Mortgage Company). In 2004, the Bank continued its growth with the addition of a title insurance company (Little Rock Title Company), and added another mortgage production office in Fayetteville in 2006. Our second retail banking branch was added in Little Rock in 2007.

What makes our Bank so different from the other zillion banks you see on every street corner?

  • A loan committee that meets 24/7 to get you lightning fast answers.
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  • Focused on Custom Mortgage Loans that can only be provided by a nimble bank with closely held ownership and few decision makers.

We offer small Hometown banking with Big Bank products and services and state-of-the-art technology.

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    Adjustable Rate Mortgage

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    With Rocket Mortgage by Quicken Loans, our fast, powerful and completely online way to get a mortgage, you can find out which loan option is right for you.

    Not comfortable starting online? Answer a few questions, and we ll have a Home Loan Expert call you.

    Key Benefits

    Get a mortgage rate as low as 3.50% (4.148% APR) with the 5-year adjustable rate mortgage.

    • Do you want to significantly reduce the cost of your mortgage?
    • Do you plan to move or refinance in the next 5, 7 or 10 years?
    • Do you want the lowest mortgage rate available?

    If you answered yes to any of these questions, an adjustable rate mortgage might be right for you! Whether you choose the 5-year, the 7-year or the 10-year adjustable rate mortgage, you’ll get the lowest rate we offer and save thousands over a traditional fixed-rate mortgage during the initial fixed-rate period. Afterwards, the rate may change once per year.

    Why you should choose Quicken Loans

    • Only Quicken Loans offers you the Closing Cost Cutter and PMI Advantage. Find out how these great options can help guide you to the best decision to meet your financial goals.
    • With more than 32 years of experience, we’ve designed a mortgage process that adapts to your needs.
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    Other loans you might be interested in:

    How It Works

    Adjustable rate mortgage qualification requirements

    • Refinance up to 95% of your primary home’s value
    • Buy a home with as little as 5% down (primary home)

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    Calculate your monthly mortgage payment using the free calculator below. A house is the largest purchase most of us will ever make so it’s important to calculate what your mortgage payment will be and how much you can afford. Estimate your monthly payments and see the effect of adding extra payments.

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    About our Mortgage Rate Tables

    About our Mortgage Rate Tables: The above mortgage loan information is provided to, or obtained by, Bankrate. Some lenders provide their mortgage loan terms to Bankrate for advertising purposes and Bankrate receives compensation from those advertisers (our “Advertisers”). Other lenders’ terms are gathered by Bankrate through its own research of available mortgage loan terms and that information is displayed in our rate table for applicable criteria. In the above table, an Advertiser listing can be identified and distinguished from other listings because it includes a “Next” button that can be used to click-through to the Advertiser’s own website or a phone number for the Advertiser.

    Availability of Advertised Terms: Each Advertiser is responsible for the accuracy and availability of its own advertised terms. Bankrate cannot guaranty the accuracy or availability of any loan term shown above. However, Bankrate attempts to verify the accuracy and availability of the advertised terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. Click here for rate criteria by loan product.

    Loan Terms for Bankrate.com Customers: Advertisers may have different loan terms on their own website from those advertised through Bankrate.com. To receive the Bankrate.com rate, you must identify yourself to the Advertiser as a Bankrate.com customer. This will typically be done by phone so you should look for the Advertiser’s phone number when you click-through to their website. In addition, credit unions may require membership.

    Loans Above $424,100 May Have Different Loan Terms: If you are seeking a loan for more than $424,100, lenders in certain locations may be able to provide terms that are different from those shown in the table above. You should confirm your terms with the lender for your requested loan amount.

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    Mortgage Calculator Help

    Using an online mortgage calculator can help you quickly and accurately predict your monthly mortgage payment with just a few pieces of information. It can also show you the total amount of interest you’ll pay over the life of your mortgage. To use this calculator, you’ll need the following information:

    The dollar amount you expect to pay for a home.

    The down payment is money you give to the home’s seller. At least 20% down typically lets you avoid mortgage insurance.

    If you’re getting a mortgage to buy a new home, you can find this number by subtracting your down payment from the home’s price. If you’re refinancing, this number will be the outstanding balance on your mortgage.

    Mortgage Term (Years)

    This is the length of the mortgage you’re considering. For example, if you’re buying new, you may choose a mortgage loan that lasts 30 years. On the other hand, a homeowner who is refinancing may opt of a loan that lasts 15 years.

    Estimate the interest rate on a new mortgage by checking Bankrate’s mortgage rate tables for your area. Once you have a projected rate (your real-life rate may be different depending on your overall credit picture) you can plug it into the calculator.

    Mortgage Start Date

    Select the month, day and year when your mortgage payments will start.

    Mortgage Calculator: Alternative Use

    Most people use a mortgage calculator to estimate the payment on a new mortgage, but it can be used for other purposes, too. Here are some other uses:

    1. Planning to pay off your mortgage early.

    Use the “Extra payments” functionality of Bankrate’s mortgage calculator to find out how you can shorten your term and net big savings by paying extra money toward your loan’s principal each month, every year or even just one time.

    To calculate the savings, click “Show Amortization Schedule” and enter a hypothetical amount into one of the payment categories (monthly, yearly or one-time) and then click “Apply Extra Payments” to see how much interest you’ll end up paying and your new payoff date.

    2. Decide if an ARM is worth the risk.

    The lower initial interest rate of an adjustable-rate mortgage, or ARM, can be tempting. But while an ARM may be appropriate for some borrowers, others may find that the lower initial interest rate won’t cut their monthly payments as much as they think.

    To get an idea of how much you’ll really save initially, try entering the ARM interest rate into the mortgage calculator, leaving the term as 30 years. Then, compare those payments to the payments you get when you enter the rate for a conventional 30-year fixed mortgage. Doing so may confirm your initial hopes about the benefits of an ARM — or give you a reality check about whether the potential plusses of an ARM really outweigh the risks.

    3. Find out when to get rid of private mortgage insurance.

    You can use the mortgage calculator to determine when you’ll have 20 percent equity in your home. This percentage is the magic number for requesting that a lender wave private mortgage insurance requirement.

    Simply enter in the original amount of your mortgage and the date you closed, and click “Show Amortization Schedule.” Then, multiply your original mortgage amount by 0.8 and match the result to the closest number on the far-right column of the amortization table to find out when you’ll reach 20 percent equity.


    How To Calculate Mortgage Payments – Interest and Mortgage Formula Calculation, calculate mortgage payment with


    How To Calculate Mortgage Payments

    Copyright 2014 by Morris Rosenthal

    All Rights Reserved

    Interest and Mortgage Formula Calculation

    If you loaned a bank $100,000 at a 5% interest rate, compounded annually, the bank would pay you $5,000 per year. So why can’t you get a $100,000 mortgage and pay the bank $5,500 a year, let them earn a 10% profit? The reason is that traditional mortgages are designed so you end up owning the house when the mortgage is paid off. Our simple example above would apply to an “interest only” mortgage, where you are really just renting the house from the bank. After 30 years, zero equity. It’s the reverse of your loaning $100,000 to the bank and earning $5,000 per year in interest. The bank doesn’t get to keep your $100,000, they’re just paying for the use of it. In essence, the bank is renting the principal from you, the same way you rent a house from the bank with an interest only mortgage.

    The next complication in mortgage interest rate calculations is that interest is compounded. Going back to our loaning the bank money example, lets say you agreed to loan the bank $100,000 for 10 years, with the interest being compounded onto the principal annually. Using simple interest compounded annually, the situation would look like this.

    So after 10 years, the principal has grown by over 50%, from $100,000 to $155,132.84. The amount of interest you are earning every year has also grown over 50%, even though the interest rate is fixed, at 5% compounded annually. In order to illustrate the effect compound interest has on mortgage payments, let’s turn the simple ten year loan into a mortgage, where you are working to pay off the principal so that you can own the house. If you were only willing to pay $5,000/year, you’d never make a dent in the principal, so it would be an interest only mortgage. But let’s say you were willing to pay $6,000/year. That comes to $500 a month, but since we’re keeping it simple and only compounding interest once a year, there’s no reason to track the monthly payments. Since the interest gets added back onto the principal at the end of every year, principal goes down very slowly. The mortgage payments would look like this:

    So, after ten years you’ve paid the bank $60,000 on your $100,000 mortgage, and you still owe them $88,973.43. That’s the compound interest the bank is charging fighting against your payments, and the only way to pay less interest in the long run is to pay more per year. Lets say you were willing to pay $12,000 per year, or $1,000 per month. Would that get the mortgage paid off in ten years?

    So, after ten years you’ve paid the bank $120,000 on your $100,000 mortgage, and you still owe them another $22,814.05, but at least the end is in near, and in another two years the loan will be paid off.

    With mortgages, we want to find the monthly payment required to totally pay down a borrowed principal over the course a number of payments.The standard mortgage formula is:

    M = P [ i(1 + i) n ] / [ (1 + i) n – 1]

    Where M is the monthly payment. i = r/12. The same formula can be expressed many different way, but this one avoids using negative exponentials which confuse some calculators.

    For our $100,000 mortgage at 5% compounded monthly for 15 years, we would first solve for i as

    i = 0.05 / 12 = 0.004167 and n as 12 x 15 = 180 monthly payments

    Next we would solve for (1 + i) n = (1.004167) 180 using the x y key on the calculator, which yields 2.11383

    Now our formula reads M = P [ i(2.11383)] / [ 2.11383- 1] which simplifies to

    M = P [.004167 x 2.11383] / 1.11383 or

    M = $100,000 x 0.00790 = $790.81

    All of the rounding down I did makes a 2 cent difference on the monthly payment, compared with keeping all the digits the calculator can handle. Now, one important feature of the mortgage formula is that it’s the principal is multiplied last, meaning that we can develop a table of mortgage rate multipliers for any fixed time period that will yield a monthly payment simply by multiplying the principal borrowed.

    If you’re curious to know how much interest you’d pay the bank over the course of the mortgage,just multiply the amount of the monthly payment by the number of payments and subtract the principal:

    ($791.81 x 180 ) – $100,000 = $142,525.80 – $100,000 = $42,525.80

    The only bright side to paying the bank all of that interest is that in most cases, it’s deductible on your Federal income tax in the in the years that it’s paid. The savings to you depends on what tax bracket you’re in. If you’re only in the 10% tax bracket to start with, you’re only getting a 10% discount on your taxes for carrying a mortgage. If you’re in the 25% tax bracket, you’re getting a 25% discount.

    If you want to skip the formula and just read your monthly mortgage payment from a table, I’ve created fixed rate mortgage tables for 15 and 30 year mortgages, covering rates from 4.0% to 5.95%. Note, I use the same numbers from this page in my amortization formula example.


    How to Calculate Your Mortgage Payment, calculate mortgage payment with taxes.#Calculate #mortgage #payment #with #taxes


    How to Calculate Your Mortgage Payment

    Calculate mortgage payment with taxes

    Understanding your mortgage helps you make better decisions. Instead of just taking whatever you get, it pays to look at the numbers behind any loan – especially a big loan like a home loan.

    To calculate a mortgage, you’ll need a few details about the loan. Then, you can do it all by hand or use free online calculators (or a spreadsheet) to crunch the numbers.

    Most people only focus on the monthly payment, but there are other important details that you need to pay attention to.

    We’ll start with calculating the payment, and we’ll also look at how much you pay in interest ​and how much you actually pay off – in other words, how much of your house you’ll actually own.

    The Inputs

    To calculate (and understand) the payments, gather the following information about a potential mortgage loan:

    • The loan amount (or principal)
    • The interest rate on the loan (not necessarily the APR, which also includes closing costs)
    • The number of years you have to repay (also known as the term)
    • The type of loan: fixed rate, interest only, etc.
    • The market value of the home
    • Your monthly income

    Calculations for Different Loans

    The calculation you use will depend on the type of loan you have. Most home loans are fixed-rate loans (for example, standard 30-year or 15-year mortgages).

    For those loans, the formula is:

    Loan Payment Amount / Discount Factor

    You’ll use the following values:

    Example: assume you borrow $100,000 at 6% for 30 years to be repaid monthly. What is the monthly payment (P)?

    • D 166.7916 ( <[(1 .005)^360] - 1>/ [.005(1 .005)^360])
    • P A / D 100,000 / 166.7916 599.55

    How Much Goes Towards Interest?

    Your mortgage payment is important, but you’ll also want to know how much you lose to interest each month. A portion of each monthly payment is your interest cost, and the remainder goes towards paying down your loan (you might also have taxes and insurance included in your monthly payment).

    An amortization table can show you – month-by-month – exactly what happens with each payment. You can create an amortization table by hand, or use a free calculator or spreadsheet to do the job for you. Take a look at how much total interest you pay over the life of your loan. With that information, you can decide if you want to save money by:

    • Borrowing less
    • Paying extra each month
    • Finding a lower interest rate
    • Choosing a shorter term loan (15 years instead of 30 years, for example)

    Interest Only Loan Payment Calculation Formula

    Interest-only loans are much simpler to calculate. For better or worse, you don’t actually pay down the loan with each required payment (although you can usually pay extra each month if you want).

    Example: assume you borrow $100,000 at 6% interest-only with monthly payments.

    What is the payment (P)?

    Loan Payment Amount x (Interest Rate / 12)

    Check your math with the Interest Only Calculator.

    Your interest only payment is $500, and it will remain the same until:

    1. You make additional payments (which will reduce your loan balance – but your required payment might not change right away), or
    2. After a certain number of years you’re required to start making amortizing payments, or
    3. You make a balloon payment to pay off the loan entirely

    Figure Out How Much you Own (Equity)

    You might also want to know how much of your home you actually own. Of course, you own the home but until it’s paid off, your lender has a lien on the property so it’s not free-and-clear. The amount that’s yours – your home equity – is the home’s market value minus any outstanding loan balance.

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    There are several reasons you might want to calculate your equity.

    Your loan to value (LTV) ratio is important because lenders look for a minimum ratio before approving loans. If you want to refinance or figure out how big your down payment needs to be, you need to know the LTV ratio.

    Your net worth is based on how much of your home you actually own. Having a million dollar home doesn’t do you much good if you owe $999,999 on the property.

    You can borrow against your home using second mortgages and home equity lines of credit (HELOCs). But most lenders need to see an LTV below 80% to approve a loan.

    Can you Afford the Loan?

    Lenders often offer you the largest loan that they’ll approve you for. This is typically based on their standards for an acceptable debt to income ratio. However, you don’t need to take the full amount – and it’s often a good idea to borrow less.

    Before you apply for loans, look at your monthly budget and decide how much you’re comfortable spending on a mortgage payment. After you’ve made a decision, start talking to lenders and looking at debt to income ratios. If you do it the other way around, you might start shopping for more expensive homes (and you might even buy one – which will affect your budget and leave you vulnerable to surprises). It’s better to buy less and have some wiggle room than to suffer just to keep up with payments.