Mortgage - Free Calculators

Amortization

Amortization refers to the distribution of a monetary lump-sum over multiple smaller monetary installments, which include both a principal payment and an interest payment. In mortgage terms, positive amortization results in the entire loan eventually being paid in full. Negative amortization results in the borrower owing more in the future than they do in the present.

Positive Amortization

Positive amortization refers to a gradual reduction in a loan's principal balance. This is done by paying off the full interest plus a small principal amount on a regular basis. Positive amortization, also referred to as simply "amortization" is the process most loans and mortgages operate under.

While positive amortization doesn't guarantee your monthly payments will gradually go down, it does mean you will eventually pay off your loan. It also means your mortgage payments should stay relatively stable, unless you have an ARM and there is a dramatic change in your mortgage's interest rate.

Negative Amortization

As its name suggests, negative amortization is the oposite of positive amortization. With a negatively amortized loan, the borrower does not pay off the full interest obligation with their regular payments. As a result, the excess unpaid interest is eventually added to the principal amount, resulting in a higher principal balance.

In recent years, rapidly increasing property values and low interest rates resulted in the rise of negative amortization mortgages, also known as "neg am" loans. The argument for neg am mortgages was that ever-growing property values would give a homeowner steadily growing positive equity, which could then be used to refinance and off-set any payment increases. But this assumption did not take a decline in property values into account.

Some loan programs, such as the Option ARM, give homeowners the choice of paying off the monthly interest and some principal, paying the full monthly interest, or paying less than the monthly interest owed. The latter option results in negative amortization.

Sadly, too many borrowers did not understand the nuances of negative amortization. This has resulted in some homeowners facing overwhelming mortgage payment increases or even loosing their property to foreclosure. As a result, negatively amortized mortgages, including Option ARMs, should be approached with caution.

Negatively amortized mortgages are often advertized with unbelieveable interest rates, such as 1%, or with extremely low monthly payments. For example, a $200,000 mortgage with a monthly payment of $500 refers to a negative amortization mortgage, and could result in future stress or misery for the borrower.

Expert Advice

For more information about mortgages consult with America's Lending Partners, an established and trusted authority in the mortgage industry. ALP's team of experienced and ethical Mortgage Planners can help you avoid the pitfalls of harmful mortgages, and find you a competitive home loan which suites your short and long term needs.

Mortgage Planning

Mortgage Planning provides a comprehensive mortgage solution to home buyers and owners. Mortgage planning allows you to look at your overall financial picture and see exactly which mortgage program fits best with your short and long-term plans. The goal of mortgage planning is to help you understand the different types of loans available and how each one can affect your financial situation in various ways.

Through a series of informative reports, our mortgage planners take you through every loan detail that may affect your financial health, including: interest rate, monthly payment, tax benefits and much more. Best of all... there is absolutely no extra cost for these reports!

Mortgage Planning Reports

Total Cost Analysis

Selecting the right mortgage program can save you thousands of dollars over the life of the loan. Using this insightful analysis, you will see the total cost of various loan programs and be able to choose the mortgage product that is most advantageous to you.

Debt Consolidation Analysis

Consolidating multiple high-interest loans or credit cards into one lower interest rate loan can save you hundreds of dollars each year, not to mention the peace of mind that comes with a single, lower payment. You can use this analysis to make an informed decision about your debt structure.

Rent vs Own Analysis

Analyzing the many benefits of homeownership versus the recurring costs of renting will show you how buying a home can positively impact your long-term asset accumulation.

Rate Watch Report

Tracking current rates and new loan products as they become available can save you even more money for years to come. We are committed to securing the lowest interest rate and best mortgage product for each person today. With this report, we will keep track of the market and let you know when a better rate or program becomes available.

Advanced Mortgage Planning Reports

Equity Repositioning Analysis

Discover how small changes in your mortgage structure can dramatically increase the value of your total investment over your lifetime. You can make informed decisions regarding your mortgage with long-term goals in mind.

Annual Equity Review

Maintaining a close watch on the chosen mortgage plan will keep you on track with the financial goals you've set forth, and will allow for any changes to be made to the mortgage or mortgage plan based upon your changing needs. This complimentary review helps you stay focused on your goals and make adjustments if necessary.

To find out more about this revolutionary new service, click here, and get a new perspective on your next home loan.

London Interbank Offered Rate

The London Interbank Offered Rate (also known as LIBOR) is an interest rate benchmark. It is published and formulated on a daily basis by the British Bankers Association and is used as a reference rate for a number of different sectors and financial instruments.

Use with Mortgages

Over the past decade, the LIBOR has increasingly been used as the reference index for calculating interest rate changes on American adjustable rate mortgages. As with any interest rate benchmark, the LIBOR can increase or decrease, depending on various international market factors.

There are in fact several LIBORs. Each one is associated with a different deposit maturity period. Adjustable rate mortgages are commonly tied to the 6-month LIBOR, which, as the name suggests, changes every 6 months. An adjustable rate mortgage tied to the 6-month LIBOR usually sees an interest rate change every 6 months. When that change occurs, the most recent 6-month LIBOR rate is used, in conjunction with the mortgage's margin, to formulate the new mortgage interest rate. If the most recent 6-month LIBOR was 5% and a mortgage's margin is 2%, the new interest rate for that mortgage will be 7%, assuming it doesn't exceed the mortgage's rate adjustment cap.

Neither the LIBOR nor any other interest rate benchmark influences fixed rate mortgages. Such reference rates only influence adjustable rate mortgages.

Valuable Information

When applying for an adjustable rate mortgage, always identify which interest rate benchmark the mortgage will be tied to. Also check the mortgage's margin, the introductory fixed rate period and whether the mortgage has any prepayment penalties. These valuable pieces of information will empower you when you are negotiating with multiple lenders.

If you feel overwhelmed by the LIBOR, adjustable rate mortgages, and similar concepts, you can consult with a mortgage broker. Better still, contact a mortgage planner, who will help you select the best mortgage for your financial goals, and show you how to use your mortgage to secure your home and plan for the future.

Interest Rates

For most people, a home purchase is one of the biggest investments they'll make. And unless you, as a buyer, can pay for a home outright, you'll need to take out a mortgage. A key element of a mortgage is its interest rate. The interest rate determines how much extra money you'll pay the lender for the priviledge of lending you the money for your home. Therefore even small differences between interest rates can have a dramatic impact on how much extra money you spend over the lifetime of the loan.

Fixed Versus Adjustable

In the mortgage world, interest rates are basically either fixed or adjustable. Fixed interest rates stay at a static rate for a given period of time. For a 30-year fixed mortgage, the interest rate stays the same for the entire lifetime of the loan. This means that, excluding taxes and insurance, the monthly mortgage payment does not change throughout the 30-years the mortgage is being paid off.

Adjustable interest rates change periodically, depending on the reference index they are based on. For example, mortgages using the 6-month LIBOR will experience interest rate changes every six months. Such an interest rate change translates into an increase or decrease in the mortgage's minimum monthly payment, depending on whether the interest rate has risen or fallen since the last benchmark. The higher the rate change, the more dramatic the payment increase will be.

Mortgage Interest Rate Ramifications

The general direction in which interest rates are heading can have a massive impact on the housing market. Higher interest rates cut into how much home one can afford, and this in turn impacts supply and demand. Although other factors also impact housing, as mortgage interest rates rise, demand for housing generally decreases and prices fall. Likewise, a drop in interest rates encourages people to buy or refinance homes, which raises prices. The housing boom that started around 2001 was primarily driven by a sharp drop in mortgage interest rates.

Getting the Right Rate

For the most homeowners, these broad interest rate trends can determine which home they buy, or whether they buy at all. Mortgage interest rate changes also indirectly impact how much disposable income they have. So the importance of finding a mortgage with a favorable interest rate are clear. Homeowners and buyers looking for a great low rate should consider the services of America's Lending Partners. ALP offers you up to 4 loan offers from a national network of trusted lenders. You fill out one easy form, and then negotiate with multiple lenders to find the best rate and terms.

Homeowners and first time buyers who need extra help, and people who are interested in learning how their mortgage can impact their long-term financial plans, should contact a mortgage planner. These trained, experienced mortgage professionals can not only get you a great rate, but also provide a level of guidance and insight that is beyond the scope of a traditional mortgage broker.

Mortgage Broker

A mortgage broker is a licensed individual who acts as an intermediary between a borrower and a mortgage company. A broker arranges financing for borrowers with a variety of lenders. A mortgage broker does not make loans, but receives payment, usually in the form of a commission, for facilitating the loan transaction between the borrower and the lender.

Mortgage brokers take applications from potential borrowers, complete all of the necessary paperwork and obtain any required documentation, shop the loan package around to various lenders, obtain quotes from lenders, and present them back to borrowers. They may also perform additional services such as arrange for property appraisals, order title searches and inspections, and provide other legal services as required. These additional services may or may not be included in the broker's fee.

Services offered by a Mortgage Broker

A mortgage broker generally offers the following services:

• Quotes interest rates
• Explains mortgage program
• Provides a good faith estimate
• May send a newsletter

In states where licensing is required, a mortgage broker also must complete annual continuing education to maintain their license in good standing.

The Mortgage Planner Difference

Take a moment to compare an America's Lending Partners Mortgage Planner to a traditional loan officer or mortgage broker and you'll see there's a tremendous difference!

America's Lending Partners Mortgage Planners are mortgage experts who have taken their careers to a higher level through extensive training in home financing, real estate equity management and ethical business practices. They analyze a customers' personal situation and prepare a Mortgage Plan tailored to fit their individual needs. And best of all...there's absolutely no additional cost for this service!

Learn more about America's Lending Partners Mortgage Planning service.

Loan Officer

Many consumers take out loans in order to afford major purchases and investments, such as buying a home. Loan Officers assist clients in applying for loans and structuring the loan package.

Responsibilities

A loan officer acts as intermediary between the lending institution for whom they work and borrowers who wish to obtain a loan from that institution. Mortgage loan officers represent banks or lenders who provide homeowners and buyers with residential mortgages, or companies with commercial mortgages. Mortgage loan officers often build relationships with real estate agencies to gain recommendations from real estate agents, who are in contact with consumers and/or firms buying property.

In addition to helping borrowers apply for loans, loan officers help verify their creditworthiness and likelihood of repaying the loan. Loan officers may also assist clients who find it difficult to qualify for traditional loans. They may help clients decide which loan is most suitable for them and explain loan details.

Licensing

Loan officers working in banks or credit unions currently do not have specific licensing requirements. Those working in mortgage banks or brokerages, though, may have specific licensing requirements as designated at a state level. While college education is not a requirement for the position, loan officers generally have a bachelor's degree in economics, finance, or a similar field.

Loan Officer versus Mortgage Planner

Loan officers provide a valuable service to both borrowers and lending institutions. However, borrowers who seek to compare multiple lenders and find the best long-term solution may be better served by an America's Lending Partner's Mortgage Planner. Our Mortgage Planners are experts who have undergone extensive training in home financing, real estate equity management and ethical business practices. They offer borrowers the choice benefits of a mortgage broker coupled with a long-term financial vision. They analyze a customer's current financial situation, help them formalize their long-term financial goals into an achievable plan, and recommend financing options and loan programs that help borrowers realize their extended objectives, and build their net worth.

Mortgage Planner

Mortgage Planners are mortgage experts who have taken their careers to a higher level through extensive training in home financing, real estate equity management and ethical business practices. They analyze a customers' personal situation and prepare Mortgage Plans tailored to fit their individual needs. Mortgage planners offer additional services beyond what a typical loan officer or mortgage broker can do for a borrower.

In addition to just showing the borrower loan offers, a mortgage planner can:

• Review the customers' current financial situation (mortgage, income, debts)
• Recommend loan products and strategies that can assist the borrower to maximize the advantages of homeownership
• Put together a 5 to 20 year plan that shows the customer "bottom line" effects of different types of home loans (e.g. how much equity they will have, how much they will still owe on their mortgage, how much savings they will have accumulated, etc.)

Mortgage Planner Training and Education

America's Lending Partners has licensed and trained mortgage planners on staff to assist you with every aspect of the loan process - whether you're a first-time home buyer or seasoned homeowner looking for smarter strategies to borrow and save. Our mortgage planners receive ongoing education in the following areas:

• Cash flow management
• Real estate equity management
• Debt analysis
• Real estate investment analysis
• Current and emerging mortgage product options
• State required annual continuing education

The Mortgage Planner Advantage

In addition to providing you with a series of informative and educational reports tailored to your individual financial situation, our mortgage planners will:

• Conduct a personal consultation to understand your goals
• Provide a cost analysis of multiple mortgage options
• Offer guidance and expert advice in determining the best loan option
• Negotiate with multiple lenders to obtain the best deal on the chosen mortgage product
• Work with you to improve your cash flow, increase your net worth, and minimize taxes (consult with your tax advisor)
• Be available as a long term advisor to ensure your plan remains successful over time
• Provide a complimentary Rate Watch service and an annual Equity Review

And best of all...there is absolutely no extra cost for this service! Find out how a mortgage plan can help you find better ways to borrow and save smarter.

Second Mortgage

A second mortgage is another name for a Home Equity Loan. A second mortgage is a loan backed by the equity in a borrower's home. Second mortgages, also called second liens, are an attractive option for homeowners who want to borrow additional cash for a variety of purposes - home improvements, debt consolidation, auto purchases or even family vacations.

The main advantage of a second mortage over personal or auto loans is the interest is usually tax deductible, depending on the borrower's financial situation. However, it's always a good idea for a borrower review the tax implications of their individual situation with a qualified tax advisor.

How It Works

With a traditional second mortgage, the borrower receives a lump sum of cash that is paid back to the lender in payments of principal plus interest over the life of the mortgage. The borrower is in complete control over the funds and how they are spent.

Getting the Best Deal

Obtaining a second mortgage is a simple and quick process, but there are many lenders and competitive offers to choose from. With America's Lending Partners' free, no obligation service, you can get up to four second mortgage loan offers, and then choose the one that's best for you. Or you can speak with one of ALP's experienced Mortgage Planners, and find out how a second mortgage fits with your long-term financial goals.

Compound Interest

Compound interest, or interest that is added to the principal balance of an account, is a critical factor in many areas modern financing, including mortgages. Compound interest is often characterized as having a 'snowball effect,' because over a longer period of time it can have a significant impact on the balance of an account.

General Example

The concept of compound interest involves the recursive accrual of money. For example, let's say an individual opened a monetary account that saw interest compounded on a monthly basis. He or she opened the account in January with an initial monetary deposit. In February, a fractional interest payment would be added to the balance based on the initial deposit, and would thus marginally increase the principal balance. The March interest payment would be calculated based on the initial deposit plus the interest accrued in February. So this payment is said to be compounded into the principal balance, and would nudge the principal balance up a little higher.

This pattern would continue until this account closes or the balance is reduced to zero. Any money withdrawn from the account would negatively affect the principal balance, and thus the amount of interest accrued each month. If no money was ever withdrawn from the principal balance it would continue to increase at ever more noticeable levels. For the first few years the increases would be barely noticeable, but eventually they would appear quite dramatic.

Compound Interest and Mortgages

In the context of mortgages, compound interest often comes into play when a borrower pays slightly more than his or her minimum monthly payment each month. The extra amount is applied to the principal balance, which then fractionally reduces the amount of interest required the next month. Because the minimum monthly payments of a mortgage are usually fixed, the amount applied to principal will gradually increase, even if no more than the minimum payment is applied going forward.

Auto Loan

Before you go car shopping, you do your homework. Not only should you know what type of car you're looking for and what features are important to you, you should also have a plan of how you're going to pay for it.

Auto Financing Options

Knowing your car financing options before you set foot in the showroom can save you hundreds of dollars and give you the negotiating power you need to get a great deal.

There are several different places to obtain an auto loan - banks, credit unions, or other financial institutions. Typically, credit unions offer the most favorable rates to their members, but with some research, you may be able to find a better deal through your local bank or even a private lender. It pays to shop around!

You can also obtain financing through the dealer or auto manufacturer. Sometimes, dealers or manufacturers offer special financing incentives or promotions designed to entice customers to purchase, particulary when their have an overstock of certain model vehicles. While its possible to get a great auto loan deal through the dealer or manufacturer, its best not to count on this type of financing when you walk into the showroom. These programs often have restrictions on the borrower's credit or require a certain down payment to qualify for these programs. Read the fine print!

Another great option for financing your auto purchase is with a home equity loan. If you own your home and have built up some equity, you may be able to obtain a home equity loan at a lower rate than an auto loan, and take advantage of the tax deductability that auto and personal loans don't offer. But it's always wise to consult your tax advisor first to make sure that a home equity loan is a smart financing option for you.

If you own your home and are interested in obtaining a home equity loan to finance your new or used vehicle purchase, America's Lending Partners can help you find a great deal fast. Fill out our short 4 Loan Offers form and get up to 4 different lenders competing for your loan. Or if you prefer a little more expert advise, speak directly with one of our licensed, experienced Mortgage Planners, who can help you choose which home equity loan program and term fit with your current financial situation and goals.

Know Before You Go

The best way to auto shop is with a pre-approved loan from a trusted lender, so you know your spending limit and have a solid financing option lined up before you sign a purchase agreement. Then, keep your options open and consider any special financing that the dealer or manufacturer is offering. But beware, offers of no or low down payments, zero percent financing, or low interest rates coupled with a high down payment, need extra scrutiny. Know your numbers - down payment, interest rate, term of loan - before you shop and be familiar with your options.

Also, don't be afraid to ask for a written quote. Most reputable dealerships will honor a written quote for at least 24 hours, so you can have a little time away from a potentially high-pressured sales environment to consider which type of auto financing is best for you.