Super Loan Calculators

Via MiamiHerald.com, Posted on Thu, Mar. 13, 2008:

If you were still living like a student when you last determined your monthly student loan payments, it’s time to review things.

Call your loan servicer or try an online calculator to determine how much more it would cost — and, in the long term, save — you per month if you shaved a few months, or even years, off your repayment schedule.

The average U.S. student loan balance is around $19,000. At an interest rate of 6.5 percent, paying $160 a month would set the repayment end date at 15 years. But bumping your payment up to $200 a month could trim up to four years off the life of your loan — and save you $3,000 in interest. Food for thought . . . .

Great suggestion, especially if you’re now in the workforce and earning money. You may not be ready to pay off your student loans altogether, but by increasing your monthly payments a bit you could pay off the loan much earlier and actually save a lot of money in the process.

Why? Because the extra that you pay each month goes purely to pay down the principal (the amount you owe on the loan), rather than simply servicing the interest on the loan.

A company called Webdigs (webdigs.com) reports through PR Newswire that they’ve recently been licensed to write loans in all 50 states, including Guam and Puerto Rico.  They also became the “first full-service, web-based real estate brokerage in the Minneapolis/St. Paul area.”

It’s the usual self-congratulatory type of press release, but the part that caught my eye was this:

“Webdigs recently launched a sophisticated mortgage calculator, which includes a Cost and Benefits analysis of every home listed on http://www.webdigs.com. The calculator can be accessed from the details page on each of more than 60,000 home listings.”

I visited the Webdigs website and, as the press release says, you must first search their listings and find a property you are interested in. No registration is required, which is nice. No special software or plugins required, also nice.

I found a nice downtown Minneapolis apartment selling for $534,900.00. On the listing page next to the photo I found a link to the mortgage calculator.

It is indeed a very sophisticated mortgage calculator which allows you to alter up to 20 different variables. Also, each variable is filled in by default, and you can change it if you wish. So for example the annual rate of appreciation is filled in at 6.65%, the downpayment is given as $106,980.00, the loan term as 30 years, the interest rate as 6.50%, etc. I like this because when all these fields are blank by default (as in many other calculators) some people don’t know what they mean and don’t know what to put down.

Mouse over each variable and a small floating window appears to explain the meaning of that variable.

This calculator even tells you, among other things, your tax savings on the interest you will pay,  the total real estate tax that you will pay over the life of the loan (assuming an annual tax increase rate of 1% - and you can change this variable as well), the annual cost of home owner’s insurance, the total rent you’ll save over the life of the loan, and more.

Last but not least, the calculator is easy on the eye, with alternating white and green fields and good spacing.

Based on my own rating system for loan calculators that I introduced in “Rating System for Online Loan Calculators”, I score this calculator as follows:

1. Good variety of loan calculators: 3.5 points (there’s actually no variety, just the one calculator, but it makes up for that in quality).
2. No registration required to use the calculator: 2 points.
3. No special software or plugins required: 2 points.
4. Explanation of what to use the loan calculator for: 0 points.
5. Explanation of how to use the calculator: 1 point.

Total: 8.5 points out of a possible 10
Rating: Excellent 

I’m going to be adding a number of free loan calculators to this site in the coming few weeks. There will be a simple loan calculator, closing costs calculator, loan comparison calculator, interest payment calculator, rent or buy calculator, and more. These calculators run on a simple Java applet, so you will have to have Java installed on your computer to view them (most people do). I’m having a little trouble getting the applet to work, but as soon as I do I’ll begin adding the calculators.

In the meantime I’ll be taking a look at (and reviewing) some of the best known sites on the web that offer free loan calculators, such as BankRate.com and Interest.com.

This blog is pretty narrowly focused on one subject - loan calculators. It’s true that there are already a million websites with articles about mortgages, refinancing, etc, and also plenty of websites with loan calculators.

However, many of the online loan calculators require either a paid subscription or at least a registration that requires you to give up your email address - which will undoubtedly be followed by a ton of spam.

Another problem is that with all the articles about loans, there’s almost nothing out there that explains how to use the actual loan calculators.

One of the things I want to do with this blog is take a look at some of the best websites out there that offer free loan calculators, and to rate them based on several criteria. I was thinking that a good rating system would encompass the following:

1. Good variety of loan calculators: 4 points.
2. No registration required to use the calculators: 2 points.
3. No special software or plugins required: 2 points.
4. Explanation of what to use the loan calculators for: 1 point.
5. Explanation of how to use the calculators: 1 point.

Total Points Possible: 10 Points

So the best possible site would get 10 points. What do you think of this rating system?

How a good credit card calculator can help you budget your expenses

Credit cards are the backbone of the American consumer economy, and increasingly the world economy, as far as consumer purchases go. Today the world over people use this little plastic card engraved with numbers for day to day as well as long term purchases.

Credit cards are, of course, issued by the banks or financial institutions who are then considered the lenders. It’s important to understand this, as many people spend liberally on credit cards and don’t seem to realize that they are, in essence, borrowing money, taking loans. It’s not your money. And with the interest rates that many credit card companies are charging nowadays, it’s not much better than borrowing cash from a street alley loan shark.

American lenders are as devious as they come, and on the pretext of lending money they induce you to spend much more than is good for you. Interest is charged on the purchase if the balance accrues beyond one month. Unfortunately, many credit card users make the minimum monthly payments, thinking that’s all that’s required. While technically true, can one actually pay off a credit card (especially one that’s in continuing use) by making the minimum monthly payments? (the answer is no).

All credit cards have a credit limit. The credit limit is determined by the lender depending on an individual’s credit score. Fico is the most popular credit scoring system in the USA. Depending upon the income and expenditure and past financial history of an individual the credit score is determined. Utility bill payments like electricity bills and telephone bills paid on time without any default enhance one’s credit worthiness and financial credibility.

A decade ago you had to knock on the lender’s door, hat in hand (figuratively speaking) to learn your credit score. Not anymore. There are many online services where you can get that information.

Always keeping track of your credit card balance, your spending limit and your interest charges is just the first step. One tool that can help you figure out just how much you are paying in interest charges, and how long it will take you to pay off your credit card depending on the size of your payments, is a credit card calculator.

What is a Credit Card Calculator?

This calculator is designed to show you how long it will take to pay off your credit card and how much interest you will pay if you only make the minimum monthly payment. For this reason, it’s also called a credit card interest calculator, or a credit card payment calculator.

A credit card calculator will help you determine how long it will take to pay off your credit card balance. Simply enter in the balance on your card and Interest Rate (APR), then either choose a Minimum Payment or enter a Monthly Payment of any amount you like. All this can be done online, and generally free of charge.

Once you know your credit limit keep a check on your purchases so that you don’t exceed your budget and fall into debt. Getting over your head in credit card debt can be terrifying. Use credit card calculators to find how much you owe each month in interest and principal so that you can budget your monthly expenses accordingly.

An Excellent Online Credit Card Calculator

I have Java and ActiveX controls disabled on my computer for security purposes. I had a hard time finding websites with free credit card calculators that do not require the use of those programs. BankRate.com, for example, which has a ton of free calculators, will not work with my chosen settings.

After several dead ends, I discovered CNNMoney.com’s credit calculators. CNNMoney has one of the nicest credit card debt calculators I’ve seen. You can enter several different credit cards (giving each one whatever name you like), and for each one you type in the balance, the interest rate and the minimum monthly payment. Second, you choose to calculate based either on the minimum monthly payment, or on a fixed payment amount that you can make every month. Click “calculate”, and the calculator will tell you exactly how long it will take you to become debt free making the monthly payment amount that you’ve chosen, and how much of that total will have been interest. The answer might shock you.

Alternatively, you can tell the credit calculator that you want to be debt free in a certain length of time, say in two years, and the calculator will tell you how much you must pay every month to achieve that goal. A very handy little tool, and free to boot!

Controlling Your Credit Card Spending

The importance of keeping a check on credit card expenses cannot be overemphasized. There are some people who go overboard with their shopping just because they have a credit card in hand. It is only at the end of the month when they have to pay the credit card bills that reality bites. If these people finally land in a debt trap it would not be anyone’s mistake but their own. A credit card has to be used judiciously. In fact, just as a vehicle has a speed limit, there should be a spending limit which one should impose on oneself. This is the only way to keep yourself from going on a Christmas time spending spree, or using your credit card to fund some business expenses or necessary home expenses, then suddenly finding yourself up debt creek without a paddle.

Use a credit card calculator and keep within your spend limits. Obeying the limit you set for yourself is the best way to remain within your credit card budget.

A mortgage, of course, is simply a type of loan - specifically, it’s a loan used for the purchase of a home, in which the home itself serves as security, or collateral, for the loan.

There are two types of mortgage loans: fixed rate mortgage loans, and adjustable rate mortgage loans. Out of the two, a fixed rate mortgage loan is simpler and historically has been preferred by borrowers.

With a fixed rate mortgage loan, the monthly principal amount and the interest payments remain steady throughout the life of the loan. This type of mortgage is called a Fixed Rate Mortgage (FRM).

The total amount of interest that you’ll pay over the life of the loan will depend on the term of the loan, which is the time span of the mortgage loan (the number of years allotted to repay the loan), and the fixed interest rate on the loan. You always have the option of refinancing to secure a lower interest rate if interest rates drop. But if interest rates rise, you’ll be glad for your fixed rate loan.

So the great advantage of a fixed rate mortgage is that it enables you to buy a home or office and keep paying a steady amount irrespective of inflation or rising interest rates. Changes in interest rates do not affect your monthly mortgage payments if you opt for a fixed rate mortgage loan.

Advantage of a Fixed Rate Mortgage: Predictability

The fixed rate mortgage has been a favorite among Americans for three generations now. The major advantage of a fixed rate mortgage is you can predict what you are going to pay and budget for it. There are no unexpected surprises, no sudden doubling of your monthly payments (and yes, that can happen with variable interest rates).

A fixed rate mortgage loan is the best choice for someone with a steady, fixed income, such as a salaried employee. Presumably your salary will increase in time and the mortgage payment take up less and less of your monthly income. Make sure you are saving money as well, putting cash in a safe investment such as an index mutual fund, gold, or treasury bonds, so that if anything happens to your job you’ll have a cushion and won’t default on your home payments.

You know what you earn and what you’re capable of paying without hardship, so don’t bite off more of a mortgage loan than you can chew. For a while during the real estate boom of the 90’s and early 2000’s, people were taking out loans that had them paying up to 75% of their income on mortgage payments - and lenders went along with it. These folks figured they’d flip the property in less than a year for a big profit. Many of them did. But, as we are seeing in this huge foreclosure crisis, many people got stuck with loans they couldn’t afford and lost their homes.

The 25% Rule 

A good rule of thumb is not to assume a mortgage that would have you paying more than 25% of your monthly income. Never assume a loan with a monthly payment greater than you can bear without stressing your finances. When too much of your income is going to pay your mortgage, you are vulnerable to any unexpected setback, such as job loss or illness.

Stick with the 25% rule.

What About Small Businesses and Entrepreneurs? 

Unlike someone getting a corporate paycheck, an entrepreneur or small business person does not have a fixed income stream. Some months you make more, some months less. In this time of downward-trending real estate prices, you might consider renting, rather than buying a home.

If you’re determined to buy, remember it’s a buyer’s market, so do a lot of shopping around. Look for motivated sellers in good neighborhoods and make low-ball offers. You might get lucky. There’s no hurry, as the market will continue to decline for a while (no one knows exactly how long).

How Are Fixed Mortgage Loan Calculators Useful?

Since repayment of a mortgage varies according to the amount of loan and the term (number of years), it is always a good idea to calculate various permutations and combinations. To make these calculations, you would use a mortgage loan calculator.

A fixed mortgage calculator is one of the easier financial tools to use. Just enter your loan amount and the prevailing rate of interest. The loan calculator will do the math and tell you exactly how much your monthly payment would be over a given period of time, for example 15 years, 20 years or 30 years.

Play around with the variables and you’ll start to get a good idea of what you can afford. Many excellent, simple loan calculators are available free online and you don’t have to deal with the hassle of approaching a mortgage lender or financial consultant and then getting unwanted telephone follow-ups and solicitations.

SuperLoanCalculators.com often reviews websites with online loan calculators and even rates them according to criteria such as whether the website requires registration, whether special software or plugins are required, the quality of the loan calculator itself, and whether there’s any explanation of how to use the loan calculator.

Some websites with useful loan calculators of all kinds include:

• BankRate.com - I often find myself recommending Bankrate.com. They have many excellent tools, and I’ll be writing a complete review of their loan calculators in the near future. Among other features, they have an excellent suite of free loan calculators of all kinds, including of course a simple mortgage calculator, and also a fixed rate versus adjustable rate mortgage calculator.Bankrate.com’s fixed rate mortgage calculator, which they simply call a “Mortgage Payment Calculator,” lets you plug in your mortgage amount, the term and the start date of the mortgage. You click the calculate button, and it tells you the amount of the payment. Nice and simple. As I mentioned, the fixed rate mortgage is an easy type of loan to calculate. BankRate’s calculator also has an “extra payments” section that lets you figure out how much sooner you could pay off the loan if you added a fixed extra amount every month, or if you added an extra yearly payment, or even if you added a one-time extra payment on a particular date. It’s a very useful tool.
• CNNMoney.com also has a very good online mortgage calculator. From the home page, mouse over the Real Estate tab at the top of the page, then select Home Finance Calculator from the pulldown menu. CNNMoney’s loan calculator has certain “assumptions” built in. CNNMoney says about this: “We’ve assumed a 30-year mortgage term, annual property tax of $3,500 and homeowners insurance of $481 — the national average. And we do not factor in private mortgage insurance, which you’ll owe if your down payment is less than 20 percent of the purchase price. It averages from $50 to $80 per month. Plug in your own numbers for more tailor-made results.”
• EasyCalculation.com stands out by offering a ton of loan calculators of all kinds, with the links to the calculators conveniently placed right on the front page. In the Mortgage Calculator section, they’ve got many types of loan calculators, including: Simple Mortgage (that is be the fixed rate mortgage calculator that this article discusses), Amortization, Loan Comparison, Adjustable Mortgage Payment, Down Payment, Interest-Only Mortgage, Mortgage Prepayment, Pre-Payment Penalty, Mortgage Refinancing. You can’t fault them for thoroughness! Be aware, though, that the calculators are very basic and don’t offer all the bells and whistles of BankRate and CNNMoney’s calcualtors.

This is not an exhaustive list of websites with good online loan calculators, as there are many others available on the internet and I will never be able to review them all, though I will be reviewing the most visible ones on SuperLoanCalculators.com. Still, the websites mentioned here are among the best and should more than meet your needs.

Welcome to Super Loan Calculators. This website was conceived as a complete guide to online loan calculators, including auto loan calculators, mortgage loan calculators, refinance calculators, etc. I’ll gradually be introducing as many as fifteen different loan calculators onto this website for your use, along with concise explations of how and why to use them. I’ll also cover related subjects like credit card payment calculators, how to use an amortization table, and whether to buy or lease a car.Not only will I provide a number of free calculators, but I will also point you to the other excellent calculator resources, along with reviews of those resources. So stay tuned and check back regularly.