A mortgage calculator is a handy way to figure out how much of a mortgage loan you can afford, or what your monthly mortgage payments would be if you borrow a certain amount. But there are lots of other ways they can be useful in handling your mortgage-related finances as well.
Think refinancing. Think tax time. Think accelerating your mortgage payments or paying off your loan early. Think comparing different mortgage options to determine which is best for you.
The basic function of a mortgage calculator, of course, is to determine what the monthly mortgage payment will be on a home loan of a given size, interest rate and duration. You plug the numbers in and the calculator gives you the answer. Some also include features that allow you to calculate related costs such as homeowner’s insurance and taxes to figure out what your total monthly housing bill will be.
Using the mortgage amortization schedule to your advantage
But a mortgage calculator can also do much more, particularly if it can provide an amortization schedule showing how fast you’re paying off the loan. An amortization schedule will not only show how much you’re paying in principle and interest each month, but also updated totals for each over the life of the loan.
This is a powerful tool, because it quickly shows how changing various terms of a loan affect how much you pay, how fast you pay it off and how much your interest payments are. Running different numbers through the mortgage calculator can help you determine which are the best mortgage options for you and help you adjust your financial strategies. Some examples are:
Mortgage shopping/ interest rates, points and closing costs
Discount points allow you to reduce your interest rate by paying a fee up front, typically equal to 1 percent of the amount borrowed for reducing the interest rate by one-eighth of a percentage point. Similarly, you may be comparing two mortgage offers, one of which has higher closing costs but a lower interest rate than the other. Which is the better deal?
Paying additional costs upfront for a lower interest rate is a strategy that typically takes several years to pay off. Using a mortgage calculator amortization table to compare the two loans, you can see at what point the costs of one loan will fall below that of the other, and decide whether the difference is great enough to make it worth your while.
Accelerated payoff
Thinking about paying off your mortgage faster? Wondering how much sooner you’ll pay off your 30-year mortgage if you make a small, but consistent, increase in your monthly payments during the early years? The amortization table will not only show your new payoff date, but will also illustrate how much faster you’re building equity, if your goal is to sell, refinance or eliminate private mortgage insurance (PMI) in a few years.
Refinancing
The big question about mortgage refinancing is whether the closing costs needed to obtain a new loan are worth the lower interest rate you can obtain by refinancing. Using the mortgage calculator, you can add in the new closing costs, along with the reduced interest rate and new payment schedule, then use the amortization chart to see how long it will take you to reach the “break even” point. You can also see what your total savings would be over the life of the loan, as well as your total interest payments compared to your current mortgage.
Interest payments
Interest payments are an often overlooked aspect of mortgage costs, especially when refinancing. You’ll save money by reducing your interest rate or paying your mortgage off faster – BUT – you’ll also lose the tax breaks those interest payments provide. Since mortgage interest is what allows many homeowners to itemize their deductions in the first place, it’s good to know just when your interest payments might fall below the cutoff on an accelerated payoff or refinanced mortgage. Also, tax impacts tend to lessen the overall savings of reducing your interest payments, so it’s good to take that into account.
These are just some of the ways you can use a mortgage calculator and amortization schedule to your advantage. Basically, if you’ve got a question about the pros and cons of different approaches to handing a mortgage, you’ll find it in the amortization tables. It’s worth your while to get familiar with them.
Feel free to use the Cornerstone Mortgage's on line calculator. Here is the link. http://www.cornerstonestl.com/calculators/index.html
- Jack Buck, Jr., NMLS#266343
- Chesterfield, Missouri, United States
- Nationally and State Licensed Loan Officer
Tuesday, September 13, 2011
Thursday, September 8, 2011
Five Tips to Help Raise Credit Scores
Start by getting free copies of your three major credit reports at the government-authorized site annualcreditreport.com.
1. Check your reports for accuracy. Financial columnist Liz Weston, author of "Your Credit Score," says to look for credit cards or other accounts that aren't yours, negative entries that are more than seven years old, duplicate past-due items and incorrect Social Security number or date of birth.
2. Dispute errors. Credit bureaus are required by law to investigate mistakes you bring to their attention and report back to you. Typically, they ask the creditor that reported the past-due information to check its records. If the creditor can't verify the info or doesn't respond, the item should be deleted.
3. Pay your bills on time. Payment history makes up more than one-third of the typical credit score determination, Weston says, so paying bills on time all the time is essential to maintaining good scores. If you're forgetful, consider setting up automatic payments through your bank.
4. Pay down your debts. Lenders look at how much of your available credit on cards and credit lines you are using. If you are maxed out or close to it, lenders could assume you're on the financial edge and not lend you money.
5. Keep credit cards and other revolving accounts open. You may be tempted to close old accounts you're not using, but that won't help your credit scores and may actually hurt them. It reduces the amount of your available credit, which can lead to lower scores.
1. Check your reports for accuracy. Financial columnist Liz Weston, author of "Your Credit Score," says to look for credit cards or other accounts that aren't yours, negative entries that are more than seven years old, duplicate past-due items and incorrect Social Security number or date of birth.
2. Dispute errors. Credit bureaus are required by law to investigate mistakes you bring to their attention and report back to you. Typically, they ask the creditor that reported the past-due information to check its records. If the creditor can't verify the info or doesn't respond, the item should be deleted.
3. Pay your bills on time. Payment history makes up more than one-third of the typical credit score determination, Weston says, so paying bills on time all the time is essential to maintaining good scores. If you're forgetful, consider setting up automatic payments through your bank.
4. Pay down your debts. Lenders look at how much of your available credit on cards and credit lines you are using. If you are maxed out or close to it, lenders could assume you're on the financial edge and not lend you money.
5. Keep credit cards and other revolving accounts open. You may be tempted to close old accounts you're not using, but that won't help your credit scores and may actually hurt them. It reduces the amount of your available credit, which can lead to lower scores.
Wednesday, July 20, 2011
A New Life, New Home, New Mortgage
Are you entering a new phase in your life and looking for a new home to match? A major life transition often involves a new home, be it getting married, relocating to a new job or retiring. However, with mortgage credit being as tight as it is these days, there are some pitfalls you want to be sure to avoid.
First, don’t run up a lot of new charges on your credit cards. This is one of the most basic and obvious rules of qualifying for a mortgage, but it’s one that’s easily overlooked when you’re in a life transition. Wedding expenditures, expensive trips, an extensive new wardrobe, new golf clubs or other pricey toys – all can drive up your credit balances very quickly. Best to hold off on the spending until the new house keys are in hand.
Similarly, avoid opening new lines of credit. This can include new credit cards, but also can be other major purchases as well. A new car to go with that prestigious new job or a boat as a retirement gift to yourself may be what you’ve always wanted, but they could make lenders a bit uneasy when evaluating your loan application. You may not get turned down flat, but you could find yourself paying a higher interest rate than you might have.
One of the biggest rules of applying for a mortgage is, don’t quit your job immediately beforehand. Retirees, this means you! You’ll find it a lot easier to qualify for a new mortgage if you do it while you’re still earning your regular income, rather than trying to qualify on the diminished payout you’ll get from a pension or retirement account.
If you’re changing jobs, you might want to nail down the new house before you start the new job. While a boost in income can make it easier to qualify for the mortgage you’re seeking, the fact that it’s a new and untried position may cause some lenders pause.
If you’re getting married on the other hand, you may want to wait until the knot is tied before mortgage shopping. Or, at the very least, unite your finances before the ceremony. You’ll find it a lot easier to qualify for a mortgage with a combined income than if you’re trying to do one on just one person’s credit.
However, if one of the two of you has damaged credit, it’s best to apply for the mortgage and buy the home under the other person’s name and finances alone. That way, the two of you won’t be handicapped by the one partner’s lower credit score.
If you’re looking to upgrade from your current home, you may find it difficult to qualify for a new mortgage if you still owe on another. That’s particularly true if you’re underwater on the loan, or owe more than the property is worth, and especially so if you’re looking to buy a new home in the same community as the old. Lenders are leery of homeowners who are seeking to “buy and bail” – obtain a mortgage for a new house at today’s reduced market prices, then dump the old one once the new property is in hand. You may find that you need to put some more money into your old mortgage, at least bringing it to a positive equity position, before you can qualify for a new one.
A final mistake many people make is failing to check out their credit before applying for a new home. This can be a problem for well-established persons who are entering retirement or taking on new jobs, and who assume their finances are in order. However, anyone can have major errors on their credit reports. These can be corrected, but it takes time – it’s best to order your reports from all three major credit reporting agencies at least six months before you plan to purchase to allow time to call attention to and correct any mistakes.
First, don’t run up a lot of new charges on your credit cards. This is one of the most basic and obvious rules of qualifying for a mortgage, but it’s one that’s easily overlooked when you’re in a life transition. Wedding expenditures, expensive trips, an extensive new wardrobe, new golf clubs or other pricey toys – all can drive up your credit balances very quickly. Best to hold off on the spending until the new house keys are in hand.
Similarly, avoid opening new lines of credit. This can include new credit cards, but also can be other major purchases as well. A new car to go with that prestigious new job or a boat as a retirement gift to yourself may be what you’ve always wanted, but they could make lenders a bit uneasy when evaluating your loan application. You may not get turned down flat, but you could find yourself paying a higher interest rate than you might have.
One of the biggest rules of applying for a mortgage is, don’t quit your job immediately beforehand. Retirees, this means you! You’ll find it a lot easier to qualify for a new mortgage if you do it while you’re still earning your regular income, rather than trying to qualify on the diminished payout you’ll get from a pension or retirement account.
If you’re changing jobs, you might want to nail down the new house before you start the new job. While a boost in income can make it easier to qualify for the mortgage you’re seeking, the fact that it’s a new and untried position may cause some lenders pause.
If you’re getting married on the other hand, you may want to wait until the knot is tied before mortgage shopping. Or, at the very least, unite your finances before the ceremony. You’ll find it a lot easier to qualify for a mortgage with a combined income than if you’re trying to do one on just one person’s credit.
However, if one of the two of you has damaged credit, it’s best to apply for the mortgage and buy the home under the other person’s name and finances alone. That way, the two of you won’t be handicapped by the one partner’s lower credit score.
If you’re looking to upgrade from your current home, you may find it difficult to qualify for a new mortgage if you still owe on another. That’s particularly true if you’re underwater on the loan, or owe more than the property is worth, and especially so if you’re looking to buy a new home in the same community as the old. Lenders are leery of homeowners who are seeking to “buy and bail” – obtain a mortgage for a new house at today’s reduced market prices, then dump the old one once the new property is in hand. You may find that you need to put some more money into your old mortgage, at least bringing it to a positive equity position, before you can qualify for a new one.
A final mistake many people make is failing to check out their credit before applying for a new home. This can be a problem for well-established persons who are entering retirement or taking on new jobs, and who assume their finances are in order. However, anyone can have major errors on their credit reports. These can be corrected, but it takes time – it’s best to order your reports from all three major credit reporting agencies at least six months before you plan to purchase to allow time to call attention to and correct any mistakes.
Tuesday, July 12, 2011
Foreclosure Sales Decline Second Straight Month
Foreclosure sales nationwide decreased 7 percent from 73,000 in April to 68,000 in the month of May, according to HOPE NOW’s data.
Foreclosure starts increased 8 percent from 163,000 in April to 176,000 in May.
Permanent loan modifications decreased only slightly from April to May, falling from 86,000 to 85,000.
Proprietary modifications totaled 53,000, a 7 percent decrease from April. Seventy-eight percent of proprietary modifications included reduced principal interest payments; 57 percent had reduced principal interest payments of more than 10 percent; and 88 percent were fixed-rate modifications.
Modifications completed under the Home Affordable Modification Program >(HAMP) totaled 32,398 in May, a 12 percent increase from April.
HOPE NOW also reported that 60+ day delinquencies increased only slightly at a rate of one percent, totaling 2.67 million for the month of May.
“Despite increases in foreclosure starts and a decrease in proprietary modifications this month, there were still a few bright spots in fewer foreclosure sales, an increase in HAMP loan modifications and the third straight month of relatively flat 60+ day delinquencies,” said Faith Schwartz, Executive Director of HOPE NOW.
HOPE NOW is an industry-created alliance of mortgage servicers, investors, counselors, and other professionals.
“Since 2007, mortgage servicers have completed 4.6 million permanent loan modifications for the nation’s homeowners and there has been no slow down in the efforts to keep as many families as possible in their homes,” said Schwartz.
Foreclosure starts increased 8 percent from 163,000 in April to 176,000 in May.
Permanent loan modifications decreased only slightly from April to May, falling from 86,000 to 85,000.
Proprietary modifications totaled 53,000, a 7 percent decrease from April. Seventy-eight percent of proprietary modifications included reduced principal interest payments; 57 percent had reduced principal interest payments of more than 10 percent; and 88 percent were fixed-rate modifications.
Modifications completed under the Home Affordable Modification Program >(HAMP) totaled 32,398 in May, a 12 percent increase from April.
HOPE NOW also reported that 60+ day delinquencies increased only slightly at a rate of one percent, totaling 2.67 million for the month of May.
“Despite increases in foreclosure starts and a decrease in proprietary modifications this month, there were still a few bright spots in fewer foreclosure sales, an increase in HAMP loan modifications and the third straight month of relatively flat 60+ day delinquencies,” said Faith Schwartz, Executive Director of HOPE NOW.
HOPE NOW is an industry-created alliance of mortgage servicers, investors, counselors, and other professionals.
“Since 2007, mortgage servicers have completed 4.6 million permanent loan modifications for the nation’s homeowners and there has been no slow down in the efforts to keep as many families as possible in their homes,” said Schwartz.
Friday, July 1, 2011
CFPB Releases Round Two of New Mortgage Disclosures, Seeks Feedback
In the ongoing effort to combine Truth in Lending and Good Faith Estimate forms into a single document, the Consumer Financial Protection Bureau today released the second drafts of two sample mortgage disclosure forms, and is now seeking public comment.
The CFPB released the first round of revamped forms on May 18, after which it received more than 13,000 comments on the disclosures.
The feedback was “largely consistent with the one-on-one interviews we conducted with consumers, lenders, and brokers, and we’ve incorporated much of it into our new prototypes,” the CFPB wrote on its website.
While the first round of prototypes focused on the front page, or “shopping sheet” of the disclosure forms, the second round focuses on the back page of the forms, which covers the closing costs.
The new forms incorporate feedback from the first round of public comments, in an effort to present a design and explanation that is easily understood by consumers.
As in the previous round of review, the CFPB aims to address whether the forms help consumers understand closing costs, whether brokers and lenders can easily explain the information to customers, and seeks feedback on possible clarifications or improvements that the CFPB can implement into the next round of forms.
The request for feedback is open through Tuesday, July 5.
http://www.consumerfinance.gov/knowbeforeyouowe/
The CFPB released the first round of revamped forms on May 18, after which it received more than 13,000 comments on the disclosures.
The feedback was “largely consistent with the one-on-one interviews we conducted with consumers, lenders, and brokers, and we’ve incorporated much of it into our new prototypes,” the CFPB wrote on its website.
While the first round of prototypes focused on the front page, or “shopping sheet” of the disclosure forms, the second round focuses on the back page of the forms, which covers the closing costs.
The new forms incorporate feedback from the first round of public comments, in an effort to present a design and explanation that is easily understood by consumers.
As in the previous round of review, the CFPB aims to address whether the forms help consumers understand closing costs, whether brokers and lenders can easily explain the information to customers, and seeks feedback on possible clarifications or improvements that the CFPB can implement into the next round of forms.
The request for feedback is open through Tuesday, July 5.
http://www.consumerfinance.gov/knowbeforeyouowe/
Tuesday, June 14, 2011
FOR IMMEDIATE RELEASE: Cornerstone Mortgage is now ranked the 3rd fastest growing privately held company in the St. Louis Region.
St. Louis, Missouri (June 1, 2011)-Cornerstone Morgage, Inc.-a privately held St. Louis based mortgage banking firm-has been ranked the 3rd fastest growing privately held company in the St. Louis region by the St. Louis Business Journal.
In addition, for the second year in a row the St. Louis Business Journal named Cornerstone Mortgage the fastest growing mortgage banker in the area.
According to Jim Dean, President of Cornerstone Mortgage, this kind of phenomenal growth in a very unstable economic climate is due in part to "Hiring and retaining Loan Officers with an average of 15 years experience and are licensed at both the state and national level, unlike most bank lending officers. These professionals come to closing with a check for our clients and have eliminated all the complications in the loan process." Mr. Dean also stated, "As an independent mortgage banker, we're not reliant on any other company to originate, fund and service loans. This means we can offer pricing advantages over the larger lenders."
Cornerstone Mortgage, Inc. is a locally owned an operated Mortgage Banking firm with a proven track record in retail mortgage originations. Founded in 1995 by Jim Dean, President/CEO and Angi Stevenson, Senior Vice President, Cornerstone Mortgage has 42 Loan Officers (all state and nationally licensed) and 6 locations serving the St. Louis metropolitan area. In 2010, the company originated in excess of $500 million in residential home loans and was ranked the #1 fastest growing mortgage banking firms by the St. Louis Business Journal. Cornerstone Mortgage, Inc. has been accredited by the Better Business Bureau since 1996 and has an A+ rating.
In addition, for the second year in a row the St. Louis Business Journal named Cornerstone Mortgage the fastest growing mortgage banker in the area.
According to Jim Dean, President of Cornerstone Mortgage, this kind of phenomenal growth in a very unstable economic climate is due in part to "Hiring and retaining Loan Officers with an average of 15 years experience and are licensed at both the state and national level, unlike most bank lending officers. These professionals come to closing with a check for our clients and have eliminated all the complications in the loan process." Mr. Dean also stated, "As an independent mortgage banker, we're not reliant on any other company to originate, fund and service loans. This means we can offer pricing advantages over the larger lenders."
Cornerstone Mortgage, Inc. is a locally owned an operated Mortgage Banking firm with a proven track record in retail mortgage originations. Founded in 1995 by Jim Dean, President/CEO and Angi Stevenson, Senior Vice President, Cornerstone Mortgage has 42 Loan Officers (all state and nationally licensed) and 6 locations serving the St. Louis metropolitan area. In 2010, the company originated in excess of $500 million in residential home loans and was ranked the #1 fastest growing mortgage banking firms by the St. Louis Business Journal. Cornerstone Mortgage, Inc. has been accredited by the Better Business Bureau since 1996 and has an A+ rating.
Tuesday, May 24, 2011
When Realtors or Builders Recommend a Lender
If your Realtor or builder make a suggestion for a lender, be sure to talk to that lender. There are several reasons they make recommendations.
One reason Realtors and builders make suggestions is because they want to recommend someone reliable. Reliability is important to you, so that you don't end up with a horror story to tell. Reliability is also important to the seller, the agents, and everyone involved in your transaction because is the deal doesn't close, everyone walks away with nothing.
When agents and builders recommend lenders, they often develop a certain amount of "clout" in dealing with those lenders. This can help in a situation where you need to cut through "red tape" and get something done quickly.
When buying a new home, dealing with a recommended lender is often very important. This is because there are a lot of intricacies involved in new homes that do not exist when buying resale. If you "shop" around to find your own lender, you may end up with someone who quotes a great rate and is great with refinances or resales, but has no experience with new homes. This can lead to problems or delays.
Over the last ten years, real estate companies and builders have built up their own mortgage brokerages. "Bundled services" like this make sense because it adds another profit center to the company. This is useful because it helps real estate companies to offset higher commission splits with their agents.
In the early days of "bundled services," the loan officers and staff were often sub-par and the quality of service may not have been so great. Things have improved since then. However, because this is "captured business," sometimes these lenders don't have as much incentive to offer you great deals or lower rates. All you have to do is let them know you are "shopping rates" and they will probably work toward accommodating you as much as possible.
Never automatically disqualify a recommended lender, but be sure to be ask questions about any relationships between the lending company and your builder or real estate agent's company. That will help you be more vigilant on getting the best interest rate and the lowest costs.
One reason Realtors and builders make suggestions is because they want to recommend someone reliable. Reliability is important to you, so that you don't end up with a horror story to tell. Reliability is also important to the seller, the agents, and everyone involved in your transaction because is the deal doesn't close, everyone walks away with nothing.
When agents and builders recommend lenders, they often develop a certain amount of "clout" in dealing with those lenders. This can help in a situation where you need to cut through "red tape" and get something done quickly.
When buying a new home, dealing with a recommended lender is often very important. This is because there are a lot of intricacies involved in new homes that do not exist when buying resale. If you "shop" around to find your own lender, you may end up with someone who quotes a great rate and is great with refinances or resales, but has no experience with new homes. This can lead to problems or delays.
Over the last ten years, real estate companies and builders have built up their own mortgage brokerages. "Bundled services" like this make sense because it adds another profit center to the company. This is useful because it helps real estate companies to offset higher commission splits with their agents.
In the early days of "bundled services," the loan officers and staff were often sub-par and the quality of service may not have been so great. Things have improved since then. However, because this is "captured business," sometimes these lenders don't have as much incentive to offer you great deals or lower rates. All you have to do is let them know you are "shopping rates" and they will probably work toward accommodating you as much as possible.
Never automatically disqualify a recommended lender, but be sure to be ask questions about any relationships between the lending company and your builder or real estate agent's company. That will help you be more vigilant on getting the best interest rate and the lowest costs.
CONCLUSION
Make sure to do a little shopping for yourself. By knowing the interest rates of the market and making sure your loan officer knows you are looking at rates from other institutions, you can use that as leverage to make sure you are obtaining the best combination of service and lowest rates.
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