In that case, this calculator showcases a factor known as private mortgage insurance (PMI), which will be an added cost for the borrower until they reach a certain percentage of loan to value (LTV).Īs a bonus, a loan officer can use a detailed breakdown of the loan balance year over year to generate an amortization schedule. Suppose the down payment is below the standard 20%. This calculator provides the lender with a breakdown of their monthly mortgage payment showing interest and principal reduction. A mortgage payment calculator creates an amortization schedule based on the loan amount, interest rate, down payment and loan term (typically calculated in years). There are many unique calculators that can educate borrowers and increase the volume of digital leads.Ī mortgage payment calculator is a tried-and-true solution for any borrower looking at financing options for their home purchase. Mortgage calculators are not a one-size-fits-all-tool. Once in the system, the lender can communicate with the potential borrower and guide them through the loan application process. Lenders can fix this issue by adding a clickable link where the prospective borrower enrolls themself into the lender’s mortgage CRM. If all the calculator does is provide the answer to the borrower without any follow-up communication or calls to action, the lender is not guaranteed to win the business. The best mortgage calculators use “microtransactions,” spacing out the questions in phases to make the calculator feel less daunting.Īnother factor for lenders to consider is how the calculator they use feeds into their marketing automation. Misinformation can cause frustration for the borrower, who may feel like they are a victim of a “bait and switch,” potentially souring the borrower’s relationship before it ever really began. If the information entered by the borrower is not thorough, the calculator will give an inaccurate answer. However, this can create challenges for lenders who use these mortgage calculators as a part of their lead generation strategy. (If the loan term is the same as the amortization, this amount is always zero.A great mortgage calculator collects the right amount of information for the mortgage lender without overwhelming the borrower. The balloon payment is total interest and principal balance due at the end of the loan term. This is the total final payment for all loans that are amortized over a period of time longer than the loan term. You can then compare loans with different fees, rates, or terms. APR calculations incorporate these fees into a single rate. Likewise, a loan with a higher stated rate and very low fees could be an exceptional value. For example, a loan with a lower stated interest rate may be a bad value if its fees are too high. It is designed to help borrowers compare different loan options. Monthly Principal and Interest Payment (PI). Any other costs that should be included in the APR calculation. These fees can vary by lender but, at a minimum, usually includes prepaid interest. An upfront fee included in the APR calculation. For example, a 1% fee on a $120,000 loan would cost $1,200. For many loans a 1% origination fee is common. The dollar amount charged as a loan origination fee, which is included in the annual percentage rate (APR) calculation. Loans that are amortized over a longer period than their loan term have a balloon payment. The number of years used in calculating the monthly payment. The 5-year loan will have equal payments for 5 years and then a very large, or balloon, payment for the remaining balance. The difference is the 30-year loan will have equal payments for 30 years. For example, a loan with a 5-year term amortized over 30 years will have the same monthly payment as a 30-year loan with the same interest rate. If this loan has a "balloon" payment, the loan term will be shorter than the number of years to amortize the loan. The most common terms are 15 years and 30 years. The number of years over which you will repay this loan. Click on the "View Report" button to see the results in detail. By comparing these important variables side by side, this calculator can help you pick the loan that works best for you. Use this calculator to sort through the monthly payments, fees and other costs associated with getting a new loan. Determining which loan provides you with the best value involves more than simply comparing monthly payments.
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