Interest rates and more rebecca lemaster
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Interest rates and more… Rebecca LeMaster. Mortgage Designs. Agenda. Fixed Mortgages Other Mortgage Options Adjustable Mortgages Balloon Mortgages. Fixed Mortgages. $100,0006%30 Year. Month PaymentPrincipalInterestBalance 1 $599.55 99.55 500.00 $99,900.45

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Mortgage Designs

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Interest rates and more rebecca lemaster

Interest rates and more…

Rebecca LeMaster

Mortgage Designs


Agenda

Agenda

  • Fixed Mortgages

  • Other Mortgage Options

  • Adjustable Mortgages

  • Balloon Mortgages


Fixed mortgages

Fixed Mortgages

$100,0006%30 Year

MonthPaymentPrincipalInterestBalance

1 $599.55 99.55 500.00 $99,900.45

2 $599.55 100.05 499.50 $99,800.40

3 $599.55 100.55 499.00 $99,699.85

4 $599.55 101.05 498.50 $99,598.80

5 $599.55 101.56 497.99 $99,497.24

………..……....……….………….

356 $599.55 584.78 14.77 $2,368.52

357 $599.55 587.71 11.84 $1,780.81

358 $599.55 590.65 8.90 $1,190.17

359 $599.55 593.60 $5.95 $596.57

360 $599.55 596.57 2.98 $0.00


Types of mortgages options

Types of Mortgages - Options

  • Fixed

  • Adjustable

  • Balloon

  • Bullet

  • VA

  • FHA

  • Interest Only

  • Reverse


Adjustable rate mortgages arm

Adjustable Rate Mortgages (ARM)

  • Types: 1-year (1/1), 3/1, 5/1, 7/1, 10/1, 3/3, 5/5, 5/25…

  • Rate Adjustment Period

  • Initial Rate Period

  • Interest Rate Index (LIBOR, 1yr Treasury)

  • Margin Added to Index

  • Initial, Periodic and Lifetime Caps

  • Floor, Ceiling


Arm 5 1

ARM (5/1)

$100,000 3% initial 30 Year

2.5 % marginIndex: 1 year LIBOR (5%)

Caps: 5% initial, 2% annual, 5% lifetime, 3% Floor, 8% Ceiling

MonthRate Index Payment Interest Principal Balance

13.0% 4.917% 421.61 250.00 171.61 99,828.39

23.0% 4.833% 421.61 249.57 172.04 99,656.35

33.0% 4.750% 421.61 249.14 172.47 99,483.88

43.0% 4.667% 421.61 248.71 172.90 99,310.98

53.0% 4.583% 421.61 248.28 173.33 99,137.65


Arm 5 11

ARM (5/1)

Month Rate Index Payment Interest Principal Balance

61 6.417% 3.917% 595.68 475.40 120.28 88,785.71

62 6.417% 3.833% 595.68 474.76 120.92 88,664.79

63 6.417% 3.750% 595.68 474.11 121.57 88,543.22

73 5.583% 3.083% 551.64 406.74 144.90 87,274.53

74 5.583% 3.167% 551.64 406.07 145.57 87,128.96

75 5.583% 3.250% 551.64 405.39 146.25 86,982.71

85 6.583% 4.083% 603.02 469.81 133.21 85,502.26

86 6.583% 4.167% 603.02 469.07 133.95 85,368.31

87 6.583% 4.250% 603.02 468.34 134.68 85,233.63

97 7.417% 4.917% 646.11 519.09 127.02 83,860.74

98 7.417% 4.833% 646.11 518.31 127.80 83,732.94

99 7.417% 4.750% 646.11 517.52 128.59 83,604.35


Fixed or adjustable were you paying attention

Fixed or Adjustable?(Were you paying attention???)

Which is a better deal? i.e. Which has a higher/lower cash outflow?

Fixed: $193,255.20Adjustable: $204,807.39

Difference: $11,552.19

Who would want a fixed rate?

Who would want an adjustable rate?

Fixed: Older adults, planning to stay long-term

Adjustable: Younger adults, not planning to stay long-term


Balloon mortgages

Balloon Mortgages

  • Typically 5, 7 or 10 years

  • 15, 20 or 30 year amortization period

  • Must be paid off or refinanced at end

  • Not common anymore

  • Often convertible, terms/conditions vary


Balloon mortgage

Balloon Mortgage

  • Monthly payments, 30-year amortized, balance due at end of short time period

  • $100,000, 5%, 5 year (60 months)

Month Payment InterestPrincipalBalance


Summary

Summary

  • Fixed Mortgages

  • Many Types of Mortgages

  • Adjustable Rate Mortgages

  • Balloon Mortgages


References

References

  • http://www.homeloanlearningcenter.com/mortgagebasics/mortgagetypes.htm

  • http://www.usa.gov/topics/family/homeowners/buyingselling/mortgages/types.shtml

  • http://www.mortgagecalculator.org/helpful-advice/types-of-mortgages.php

  • http://www.isoldmyhouse.com/fsbo/mortgage-types.cfm

  • http://www.investopedia.com/university/mortgage/mortgage4.asp

  • http://www.usa.gov/topics/family/homeowners/buyingselling/mortgages/types.shtml

  • https://www.lendingtree.com/mortgage/arm-interest-rate-caps-article

  • http://www.mtgprofessor.com/Calculators/Calculator7b.html

  • http://www.mortgagecalculator.org/helpful-advice/types-of-mortgages.php

  • http://en.wikipedia.org/wiki/Adjustable-rate_mortgage

  • http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx?MSA=6442&MSA=6442&MSA=6442&MSA=6442

  • http://tcalc.timevalue.com/all-financial-calculators/mortgage-calculators/balloon-mortgage-calculator.aspx?PRINCIPALAMOUNT=100000&DOWNPAYMENTAMOUNT=0&DOWNPAYMENTAMOUNT_TYPE=Percent&TERM=30&TERM_UNITS=Years&BALLOONPAYMENTAFTER=5&BALLOONPAYMENTAFTER_UNITS=Years&INTERESTRATE=5.0%25&COMPUTE=COMPUTE&SHOWAMORTIZATIONSCHEDULE=on&CALCULATORID=HF04&HIDEFORMTAG=TRUE&TEMPLATE_ID=www.timevaluecalculators.com_1&PostBack=true#results

  • http://ncacu.org/borrow/mortgages/#balloon

  • http://rws.rwstools.com/templateroot/Articles/LoanPrograms.asp?ArticleID=1026&pvlid=5062&

  • http://math.info/Misc/Amortization_Formulas/


Questions

Questions???


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