Mortgage Financing Tips

The amount of the regular payments necessary to amortize a title loan in Atlanta over a given period of time depends on several factors: the frequency of payments (usually monthly for mortgage loans), the terms or period of repayments, the interest rate, and the amount borrowed. The table below shows the monthly payments for each one thousand dollars borrowed at various interest rates and terms. You can apply the table to any principal amount simply by multiplying the factor shown by the number of thousands of dollars borrowed.

Term of Loan

Interest Rate    20 Years        30 Years         40 Years

6%                      7.16                  6.00                  5.50

7%                      7.75                  6.65                  6.21

8%                      8.36                  7.34                 6.95

9%                      9.00                  8.05                 7.71

10%                    9.65                   8.78                 8.49

11%                   10.32                   9.52                 9.28

12%                   11.01                   10.29              10.08

13%                   11.72                   11.06               10.90

14%                   12.44                  11.85                11.71

15%                    13.17                  12.64               12.53

16%                    13.91                 13.45               13.36

17%                    14.67                 14.26               14.18

18%                    15.43                15.07                15.01

Several observations can be made the level-payment fully-amortized loan. The principal balance declines very slowly during the early years. After five years of regular payments on the loan in the foregoing example, the principal would be reduced to $95.880, a reduction of only $4120. Since principal amortization is in a sense a form of forced savings, some households might prefer to minimize, or even eliminate entirely, the amortization component. If the owner wishes to resell the house after five years, it will probably be easier for a prospective buyer to “take over” the loan if balance is still quite high. On the other hand, the lender will generally prefer a relatively more rapid reduction in principal, since the loan is seen as a safer investment if this occurs.

Each monthly payment is partly allocated to interest and partly to principal. These allocations change over time.

The level-payment fully-amortized loan is very widely used in single-family home financing, and quite commonly employed with commercial and industrial property as well. However, beginning in the late 1970’s, both federal and state regulators of lending institutions began to permit loans.  For example, adjustable rate mortgages (ARMs) permit modification of the interest rate during the life of the loan (with concomitant changes in maturity or monthly payment).  They have become popular among lenders, who are seeking relief from the financial stress they have experienced as a result of holding portfolios of fixed-rate mortgages during recent periods of rapid fluctuation in their cost of funds for title loans in Atlanta.

http://money.cnn.com/pf/

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