Mortgage Calculator

If you are looking for a mortgage calculator there must be a reason. Either you are looking to refinance or finance a new home or you are looking to evaluate the differences between different types of financing. Either way you have landed on a page that could open the door changing your financial future.

If I could show you a way to grow your savings account to as much as $200,000 in a few short years without changing your normal spending habbits you would probably tell me that whatever it is that I'm up to is a scam. But this is only part of the story.

You see, I regard the equity in my home as a savings account and I use it to get wealthy. If I can use the equity in my home in this way you certainly can also. It's not hard it just takes a little extra knowledge.

I have figured out how to payoff my mortgage at rocket speed. I used a mortgage calculator to compare options in types of financings to find the method to quickly increase the equity growth in my home. And I have found a monster. It's a way to increase interest reduction up to three times faster than normal. This means that I can get access to my money and get wealthy three times faster than everyone else.

Now everybody's situation is different. So in order to tell you exactly how this system will work for you I would have to look at your own situation and run an evaluation. Now, I'm not interested in knowing any personal information like bank account numbers, credit card numbers or any other information that you should never give out. I just need to evaluate your spending habits.

Remember you are not going to have to change your spending habits in order to succeed with this program. Oh, and there is one other thing you should know. You will not have to take money out of your pocket to use this system.

Lets first start with a discussion of what mortgage calculators you will want to look at to figure this thing out.

The very first mortgage calculator to use when working on your own personal wealth is a very simple one.

See the second link on the right. You may wish to open a second browser window to compare and follow along. Your numbers will be different than mine.

This calculator will tell you where you are at in the future if you do nothing to your equity growth. You insert your origination date (the date you took the loan out), the amount of the loan, the interest rate, the payment amount, any escrowed amounts (monthly home owners' taxex and insurance) and hit the calculator button.

It will then tell you how long it will take to pay off your mortgage. If you ask for an amortization schedual you will see that after paying on the loan for five years you have only paid down about 2% of your mortgage. You will see that after paying on it for about twenty years you have only paid off half of the mortgage. And you will see that by loans' end you will have paid aproximately two and one half times the original principal balance. In other words the principal you will have paid is one and a half times the mortgage amount (depending on your interest rate - the higher the interest rate the more interest paid, obviously).

You will pay two and a half times the amount you purchased the home for. This is all legal. I wonder why we just don't tell our friends "I bought my house for $375,000" instead of the purchase price of $150,000

I will show you how to keep as much as two thirds of that interest in your own hands rather than give it to the bank. Stay tuned for the next text module.

The above video shows the common understanding about refinancing but completely leaves out other options that are far more profitable, that is, if you believe Bens' adage "A penny saved is a penny earned."

Now that you know what your homes' payoff date is there are a number of ways that you could pay off your mortgage early.

You could simply make extra payments in addition to your mortgage payments. You would have to designate these specifically as principle payments and they would only apply if your mortgage payment schedule was up to date. Unfortunately that would cost you extra money out of your pocket. If you are like most of us we don't usually have extra money to pay down the mortgage.

You could refinance to a payment every two weeks type of mortgage (a biweekly mortgage). That would give you one additional payment every year. That would alone knock off about 7 years off of a thirty year mortgage. But the cost of refinancing might be a few points (percentage points of your mortgage amount) which would partially negate some of the savings.

By far the best way to pay down your mortgage is to use a home equity line of credit. Now a line of credit will normally be a higher interest rate loan. So you might think, "What good would it be to pay down a low interest loan with a higher interest loan?" Just doing the simple math would leave you wondering,"Is this guy nuts?" And yes it would be nuts to leave it just like that. In fact I have heard at least one mortgage broker advertising how stupid it is to even consider these type of programs.

The mortgage paradigm is very hard to break because it takes a knowledge of the different legalities surrounding types of loans.

Mortgages are closed end loans what this means is that when you borrow money leaned against a house they allow the principle to accrue interest for thirty days and at the end of the thirty days they apply your principal part of the payment to pay down the principal balance which starts a new balance to which interest is charged.

Let's say you pay your mortgage payment on the first like many mortgages are arranged. The interest part pays for last months interest accrued and the principal sits in wait to be applied almost thirty days later as a reduction to the balance on the loan. So the way mortgages are set up, the principal part of the payment is a thirty day no interest loan that you make to the mortgage company every month. And you wonder why it takes thirty years to pay off a mortgage. Incidentally the Latin derivative from which the English word mortgage comes from means "death grip"

Now let's look at a home equity line of credit. This is a completely different kind of loan animal. It's a simple interest open end loan. What that means is that any amount borrowed has interest applied to it daily. And when you pay down the principal it immediately eliminates principal to which interest is applied.

Lets say for a moment that you have a line of credit for ten thousand on your home. There is zero balance until you borrow from it. So you borrow from it on the twenty eighth $2000 to buy something. On the thirtieth you get paid $3000 and you immediately apply 2k to the home equity line of credit. You would then pay two days interest of say 10% annually or about 2/365 of 10% of $2000. That would be $1.09 of interest. To use $2000 for two day it cost you a dollar.

What if that $2000 was applied as an additional principal payment on your mortgage. You would have reduced the principal balance which would shorten your loan by maybe 12 months. If your mortgage payment was $1000 you would have saved yourself $12,000 most of which would be interest.

Now your cost would be the $2000 you borrowed plus one dollar of interest.

I think you are beginning to see how simple interest loans can significantly reduce closed end loan interest.

Now here's the problem. Where do you get the extra $2000 so you can eliminate $12,000 of payments.

Stay tuned for the answer.