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This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.
Interest rates are on the rise and many home owners who have
adjustable rate mortgages may see increases in their forthcoming
annual adjustments.
Federal Reserve Chairman Alan Greenspan made it clear in 2004
that the Federal Reserve would be increasing short-term interest
rates at a “measured pace.” With the US Dollar at its weakest
point in seven years, oil prices unstable and the evaluation of
other economic indicators, the Fed Funds Rate was hiked seven
times from 1.0% to 2.75% since June 2004 in an effort to curb
inflation. Some economists believe it won’t stop until the Fed
Fund Rate hits 4.0%.
Consumers with revolving debt accounts tied to the prime rate
have seen the effect through rising interest rate charges, as
the prime rate always rides 3% above the current Fed Funds Rate.
Mortgage interest rates are affected indirectly by these
changes. An increase in the Fed Funds Rate has an impact on
financial markets as a whole, but mortgage rates may go up or
down based on the perception investors have of current economic
statistics and their reaction to the Federal Reserve’s
after-meeting statements.
In general, when economic data indicates we have a slow-down
occurring in our economy, investors tend to sell off stocks and
reallocate that money to the safe haven of bonds and
mortgage-backed securities. The purchase of mortgage-backed
securities drives interest rates down. When economic data says
there is growth in the economy, the stock market typically
rallies and mortgage-backed securities sell off to fuel that
stock market rally. This drives mortgage interest rates up.
Our current market reflects the reaction of investors reading
between the lines on comments made by the Fed, and mortgage
interest rates are going up. This will have an affect on home
owners with adjustable rate mortgages (ARMs) tied to indexes
that are based on short-term interest rates. This includes the
11th District Cost of Funds, 12-Month Treasury Average (MTA),
London Inter Bank Offering Rates (LIBOR) and others.
This doesn’t mean that everyone with an adjustable mortgage is
in trouble right away. Some indexes are more volatile than
others. COFI moves much slower than other adjustable rate
indexes, while the LIBOR fluctuates with more volatility. But
remember, when an ARM adjusts, the new interest rate is a sum of
the borrower’s fixed margin plus the current rate of the index
the mortgage is tied to.
Consumers who foresee paying an interest rate that is
significantly higher may want to consider refinancing to take
advantage of the stability of a fixed rate mortgage.
This is also a good time for borrowers who started out in an
adjustable rate loan due to a poor credit score to transition
into a fixed rate loan if they can. Once a track record of
making mortgage payments on time and in full has been
established, this should have a positive effect on the credit
score and there’s a good chance the borrower may now qualify for
a loan with a lower interest rate.
As with any decision to refinance, it is important to take the
terms of the existing loan, the cost of the new loan, and the
borrower’s long-term needs into consideration. A qualified
mortgage professional should help weigh out the options by
providing a clear assessment of available loan programs for the
consumer.
About the author:
Mical Johnson is affiliated with Rock Financial, Inc., a
Licensed Correspondent Mortgage Lender, Florida Department of
Finance. Free consultation and a 10-Year History of ARM Indexes
are available by calling. You my also obtain a free copy of Mr.
Johnson’s Home Buyer Handbook by contacting him at
www.TampaMortgageGuy.com He is also a contributing author at
www.Debt-Free-Personal-Finance.com