Extra Mortgage Payment Calculators - An Overview

What is an extra mortgage payment calculator and how does it work? If you're one of the many homeowners trying to pay off your mortgage early, you've probably asked this question before. Here's what you need to know about these calculators, and what they can tell you.

These tools help you determine how your additional payments will affect the term of your loan, and the amount of interest paid over that term. For example, if you make an extra payment of $500 each month, the mortgage calculator will tell you when the loan will be paid off completely. It does this by calculating the amortization, or the gradual reduction, of your loan. It's a necessary step in the research process, if you're seriously considering this kind of strategy.

You can find plenty of extra mortgage payment calculators online, and they all work in slightly different ways. But the end result is always the same. They will show you the results of your additional payments, and how it affects the amortization of your mortgage.

In most cases, you would enter the interest rate, the term of the loan, and the original amount you borrowed (the principal). Next, you would enter the extra amount you want to pay each month. After entering this information, you would click the "calculate" button to generate results. The better calculators will show you a comparison between your current amortization schedule, and how it would look if you made those additional payments each month. This helps you understand how quickly you can pay off the loan, based on the total amount paid each month.

Some extra payment calculators will also tell you how much money you'll save, by paying less interest over the life of the loan. Remember, a longer payback period will cost you more money than a shorter one, because you're paying interest over a longer span of time. In some cases, you might face a prepayment penalty for paying the loan off earlier. So you'll want to know if the money saved is more than the fee imposed. It's something you need to know, before making any final decisions about your payment strategy.

You can find extra mortgage payment calculators on dozens of websites. Here's a list of websites to get you started:

• Bankrate.com
• Interest.com
• MortgageCalculator.org
• Many bank / lender websites have them, as well.

If you have additional questions about home loans, be sure to use the search tool at the top of this page. It gives you access to thousands of articles and tutorials. Good luck.

My Credit Score is 675 - Is That a Good Score in 2010?

Question: "According to Equifax, my credit score is 675 right now. Is this considered a good score in the 2010 economy? I know a lot has changed since the whole mortgage mess (or so I've heard). So I'm wondering if a 675 FICO score will help me or not."

When you refer to a good score, I'm assuming you mean one that will help you get a mortgage loan. If that's accurate, then I'd say you're in pretty good shape. You won't qualify for the lender's best rates with a 675, but you should at least be able to get approved for a loan.

According to the Experian website, the average score in the U.S. is 693. That means you are a little bit below average, at least with your Equifax number. As a result, you'll pay more interest on a loan than a person with excellent credit. You may have to provide more documentation as well, so they can verify your assets and income (but that's not a big deal).

Of course, there are other factors to consider as well. Your credit score is a big part of the qualification process, but it's not the only part. Here are some other questions you should answer, to get an idea of where you stand:

• How much of your income goes toward your various debts? More
• How much house can you afford with your income? More
• How much of a down payment do you have? More
• Will you use a conventional or government-backed loan? More
• One of your credit scores is 675, but what about the others? More

Here's something else you should know. Fannie Mae is an organization that buys mortgage loans from direct lenders, such as Wells Fargo and Citi. So if a lender wants to sell their loans to this organization, they must adhere to the borrowing / underwriting guidelines established by Fannie Mae. The minimum credit score is 620, and with a 675 you are clearly above that mark.

The only way to truly know where you stand is to apply for a loan, or to get pre-approved for one. Even if you get rejected for a loan, they'll at least tell you what the problem was. And if you do get turned down by one lender, don't stop there. Work on whatever deficiencies they pointed out, and then try again (perhaps with a different mortgage company).

Here's the bottom line. A 675 credit score is good enough to get a mortgage in 2010 -- it just depends on the other factors we discussed. I hope this answers your question. If you want to learn more about any of the things we discussed in this article, just do a search on our main page. You'll have access to more than 2,000 articles if you do that. Good luck!

Federal Mortgage Assistance Programs - Simplified

Question: "I'm completely confused about all of the federal mortgage assistance programs that have been announced over the last few months. How many of these programs are there? What kind of assistance does the federal government offer to struggling homeowners? Any clarification would be much appreciated."

Too many programs, and too many websites. That's why there is so much confusion. I cover this kind of thing for a living, and even I was lost for a while there. I found myself scratching my head over the dizzying array of websites and titles. Some of the mortgage assistance programs went through several names before landing on one that stuck. It was a mess, and that's part of the reason why it took so long to get off the ground.

So let's try to make some sense out of all this, shall we?

Federal Mortgage Assistance - In Plain English

Hope for Homeowners. Home Affordable Modification Program. Making Home Affordable. HAMP. HARP. HOPE. What does it all mean? Let's start by simplifying the name game:


Most of the federal mortgage assistance programs you've been hearing about fall under the Making Home Affordable umbrella. This federal program offers help for homeowners in two ways -- through modification and refinancing. Here's what you should know about these two paths:

Path #1 - Refinancing the Home

You might qualify for this program if (A) your mortgage is currently owned by Freddie Mac or Fannie Mae, (B) the loan-to-value ratio on your first mortgage does not exceed 125%, and (C) you are current on your payments. As indicated by the loan-to-value ratio cited above, you can actually be upside down in your mortgage and still qualify for this federal assistance program.

This program is designed to help homeowners "whose home values may have fallen relative to their mortgage values." Click on the logo above to learn more.

Path #2 - Modifying the Loan

Unlike the refi program mentioned above, this one focuses on people who are actually falling behind on their mortgage payments. For example, if the interest rate on your ARM loan spiked, or if you have lost income for some reason, you might qualify for this federal mortgage help program.

Your loan balance must be less than $729,750 (i.e., not a jumbo loan), and the monthly payment on your first mortgage must be more than 31% of your gross monthly income. The goal here is to modify or restructure the loan in order to reduce the monthly payments. Click the logo above to learn more.

How to Learn More

When you hear people talk about federal mortgage assistance programs, they're probably talking about one of the refinance or modification programs listed above. If you want to learn more about them, you should visit MakingHomeAffordable.gov and click on refinance or modification (whichever program is relevant to you).

If you meet the eligibility requirements to receive federal assistance, you should certainly apply for it. As you move forward with your research, I would urge you to ignore any negativity you might encounter. A lot of homeowners are trashing these mortgage programs, claiming that they were turned down for no apparent reason. But many of these same people failed to read the eligibility guidelines. They just went ahead and applied for help, and were subsequently turned away. Other people are frustrated by slow-acting lenders. Then they go online and blog about these programs not working. What I'm saying is this -- take everything with a grain of salt, and always consider the source.

Start by researching the requirements. If you're eligible for the refinance or modification program, you should move forward with the process. It might not work out the way you want it to, but you have nothing to lose by trying. I've personally spoken to homeowners who were able to attain a modification or refi through this federal mortgage assistance program, so it does work in certain scenarios. I can attest to that.

Coming soon: I'm preparing a list of FAQs for both of the homeowner paths described above. You'll find them right here on this blog, sometime next week.

Why do mortgage lenders want to see bank statements and pay stubs?

Question: "I've been reading about all of the paperwork I have to submit with my mortgage application. And I was wondering, why do mortgage lenders want to see bank statements and pay stubs for the last few months? Is this pretty standard across the board?"

This is all part of the income and asset verification process. Lenders want to see your bank statements so they can verify the financial assets you have on hand, primarily your checking and savings accounts. They want to see your pay stubs so they can verify your current employment and income status. These are just two of the many documents you'll have to provide.

In most cases, they will ask for your two most recent paycheck stubs (or the electronic equivalent) and your bank statements for the last three months. This is a general rule, so be sure to ask your lender exactly what they need from you. It might vary, based on their underwriting guidelines and business practices.

You can file most of this under 'P' for protecting the lender's interests. That's essentially what they are doing when they ask to see your bank statements and pay stubs for the last few months. For example, the bank statements help them verify the assets you have available for your down payment and closing costs. But they will also look for a certain "cushion" of extra funds, in the event that you lose your job. Basically, they want you to be able to pay your mortgage payments long enough for them to foreclose on the property (if such a unfortunate event were to occur). Like I said, you file it under 'P' for protecting the lender.

The same goes for your pay stubs. Mortgage lenders want to see your pay stubs so they can compare your income to your debts. This is referred to as your debt-to-income ratio, or DTI, and it's a key factor in the mortgage-approval process. If you are carrying too much debt relative to your gross monthly income, then you present more of a risk to the lender. They might not be willing to give you a loan at all, based on this particular ratio.

This article answers the question: Why do mortgage lenders want to see bank statements and pay stubs. If you have other questions about the lending industry, the home buying process, or anything relating to consumer credit, be sure to do a search at the top of this website. We have thousands of articles available, so you're bound to find the information you need.

I hope this has answered your question, and I wish you well in your future financial endeavors. Good luck, and thanks for dropping by.

How does a piggyback mortgage loan work?

Question: "What is a piggyback mortgage loan, and how does it work? Does it offer any benefits over a regular loan?"

This type of mortgage is actually a lot of fun. On closing day, a representative from your mortgage company will come to your house. They will give you a piggyback ride all the way to the office where the closing will take place (if it's within a 5-mile radius). Along the way, other home buyers using that lender will line the streets and throw confetti at you. That's why the call it a piggyback mortgage loan.

Just kidding. I wish it were that much fun. Sounds great, doesn't it?

Here's a serious definition for you:

Piggyback Mortgage -- This is when you use two loans to pay for a house. The goal here is to avoid paying for private mortgage insurance or PMI, which is usually required when you get a loan for more than 80% of the home's value.

A good example is the 80-10-10 strategy. This is where you get a first mortgage for 80% of the purchase price, a second one for 10%, and you pay the remaining 10% out of pocket in the form of a down payment. Thus, no single mortgage has a loan-to-value above 80% of the home value. And therefore, you can avoid paying PMI. The second loan piggybacks on the first, which is where the term comes from.

In other words, this is a technique used by borrowers who lack the 20-percent down payment (which is sort of a magic number in the lending industry). The end goal here is to save money with the piggyback loan strategy, by avoiding the extra cost of mortgage insurance. Does that make sense?

I hope that clears things up for you. I know the real definition is not as exciting as the scenario I started with, but that's essentially how it works. If you have other questions about the lending process, credit scores, buying a home, etc., you can do a search at the top of this website. Good luck, and thanks for stopping by.