Stephen Nelson asked:




Microsoft Excel can help you down a loan payment into its principal and interest components. Excel’s IPMT function lets you calculate the interest component of a loan payment. And Excel’s PPMT function lets you calculate the principal component of a payment.

Using the IPMT Function to Calculate Payment Interest

The IPMT function calculates the interest portion of a payment given its interest rate, the
period, the term (or number of payments), present value (or loan balance), future value (or
balloon payment), and, optionally, the type-of-annuity switch. If you set the type-ofannuity
switch to 1, Excel assumes payments occur at the beginning of the period, following
the annuity due convention. If you set the annuity switch to 0 or you omit the argument,
Excel assumes payments occur at the end of the period following the ordinary annuity
convention.

The function uses the following syntax:

IPMT (rate, period, nper, pv, fv, type)

For example, to calculate the period interest rate for the 54th payment on a 30-year, $150,000
mortgage charging 8% annual interest, you use the following formula:

=IPMT(.08/12,54,30*12,150000,0,0)

The function returns the value -957.51. Notice that to convert the 8% annual interest to a
period interest, the formula divides the annual interest rate by 12. Notice, too, that to convert
the 30-year term to a term in months, the formula multiplies 30 by 12. The function returns the interest payment amount as a negative value because it reflects a cash outflow you pay.

NOTE If you set the pv argument to -150000, you indicate that you’re loaning money. In this case, the function returns 957.51, a positive value, showing that the interest payment amount is a positive cash inflow.

Using the PPMT Function to Calculate Payment Principal

The PPMT function calculates the principal portion of a payment given its interest rate,
the period, the term (or number of payments), present value (or loan balance), future value
(or balloon payment), and, optionally, the type-of-annuity switch. If you set the type-of-annuity
switch to 1, Excel assumes payments occur at the beginning of the period, following
the annuity due convention. If you set the annuity switch to 0 or you omit the argument,
Excel assumes payments occur at the end of the period following the ordinary annuity
convention.
The function uses the following syntax:

PPMT (rate, period, nper, pv, fv, type)

For example, to calculate the period principal payment for the 54th payment on a 30-year,
$150,000 mortgage charging 8% annual interest, you use the following formula:

=PPMT (.08/12,54,30*12,150000,0,0)

The function returns the value -143.13. Notice that to convert the 8% annual interest to a
period interest, the formula divides the annual interest rate by 12. Notice, too, that to convert
the 30-year term to a term in months, the formula multiplies 30 by 12. The function returns the principal payment amount as a negative value because it reflects a cash outflow you pay.

NOTE: If you set the pv argument to -150000, you indicate that you’re actually loaning money.
And in this case, the function returns 143.13, a positive value, showing that the principal payment amount is a positive cash inflow.

Julio

Bryan Burbank asked:




When searching for a new car loan it is good to use a online loan calculator to figure out how much you will be paying for your auto loan. the best part about using these calculators is that they are free and they help know what you can afford. This is a tool that you need to use to find out what your payments are going to be.

First you want to search online for a free auto loan calculator. This will help you figure out how much your payments will be each month so you know which car you can afford. This is great information to know so that you will not be surprised each month by a payment that is more than you can afford. There are many calculators available to you so find the one that is easiest to use.

Next you need to find the best interest rate that you can because over the life of the loan you can save a lot of money when you find a low interest rate option. Just a point lower can save you a lot of money over the life of the loan and you need to take advantage of this.

Finally you must know that most car loans are secured loans and with this type of loan you will be able to secure a low interest rate. You can refinance the car if the rate of interest goes down so make sure that you keep track of the prime rate of interest.

Miguel

Bradley Marmer asked:




There seems to be very few people that have not been touched by the economic downturn of the United States economy. The unemployment rate has reached its highest point in decades, leaving many families wondering how they will make their next mortgage payment.

There is plenty of news coverage about how to receive help if a person is in foreclosure but what about those that are heading towards default? Does a person have to wait until they start missing payments to get help? The simple answer is no. The answer may be an equity loan modification.

First, what is equity loan modification? This is a renegotiation between the lender and the borrower when there is little or no equity in a home. A person can simply refinance when they have a large portion of their principal paid off but this is not the case for most people whose home values have dropped over the past year or two. It may be possible for a person to renegotiate a lower payment through a better interest rate, a longer loan period or even a reduction in the principal. These factors may help a person that is struggling to make their payment.

A person does not have to wait until they are in default to apply for an equity loan modification. Instead, the lender can be notified at any point that the homeowner is heading toward default. A lender would actually prefer that a person does not wait until they can no longer make the payment. This ensures that the lender will still continue receiving a payment as they renegotiate the loan. It may also make the lender more willing to consider a modification of the loan. A homeowner who is trying to correct a situation before it escalates appears more responsible and less of a risk for defaulting on the renegotiation.

There are many different circumstances that a lender considers legitimate reason for a homeowner to be heading towards default. This may include circumstances such as the loss of a job by the primary income earner or a hospital stay that includes enormous medical bills. A lender may consider these situations to only be extenuating circumstances that will eventually be overcome by the homeowner. Lenders are not just throwing around money at whomever is having a difficult time making their payment. Instead, they are offering equity loan modification to individuals that still appear to be a credible risk.

In an effort to stimulate the housing market, the federal government has allocated $75 billion to promote the equity loan modification process. This is an incentive that benefits both the lender and the borrower. Lenders receive a bonus for every loan modification that they process and the borrower receives monetary help for making timely payments to the lender.

Renegotiating a loan can be a very difficult process for a homeowner to take on by themselves. A person facing default would be wise to enlist the services of a company that already deals with this type of loan modification. These companies are equipped to handle the negotiations with a lender and are capable of negotiating a better deal than the homeowner. It will also help give the homeowner some peace of mind knowing that there is someone fighting on his side.

Cathy

Trivesh Hans asked:




One of the things that more people are learning to do is use the equity in there home to improve things in their lives. People will many times make mistakes concerning the equity of their home, meaning they do not have an accurate figure. Unlike some homes, a houses value will grow with the years, which means that more equity will be available for the house. Through using a home equity payment calculator, you will be able to determine what equity is available for your home, how much of an equity loan payment you can afford, and how long it will take you to pay the loan off. All of this goes to say that using a home loan equity payment calculator has been a vital part obtaining a home equity loan. With lower interest rates, more people are considering getting a line of equity credit based on their home’s value. The main thing though is getting the right home equity loan that fit’s their needs.

The most important thing that you need to remember is that a home equity line is a loan and if payment is not made, you could lose your home. This is why using a home loan equity payment calculator is very important. Most people use home equity loans for various reasons, which include improving the values of their homes or buying something that they have always wanted. The most important thing about home equity loans is the ability to pay back the loan. This is why a home equity payment calculator has become something that more people are using. Everyone loves to
know what something is going to cost him or her before buying it. Using a home loan equity payment calculator will allow you to be able to figure out the cost and affordability of the equity loan.

As more people update their homes and look for ways to save on taxes; and these people should consider using a home equity loan payment calculator. . Interest rates are at low, which means that home equity loans are on the rise. Getting the most for your dollar is still something we all strive for, just as the lowest payment is something that we also want. Once you can figure out how much your home is worth then a home loan equity payment calculator is even much more effective. Having these numbers can make it easier for people to make decisions in there lives. Sometimes, if the numbers aren’t what your looking for, there are other options for you. Paying down your loan is something that can also help you get the loan you are looking for. This is something that the home loan equity payment calculator can help you look at. Information and numbers are important. By being able to see different payments at different levels will be very useful.

Home equity lines of credit continue to be one of the more popular credit choices for many consumers. Many people have paid down there loans on there homes, so equity loans are easier for them to get. As the Internet has grown, so has our desire for information and tools to use. A home loan equity payment calculator continues to be something that people are using to see where they stand as far as future loans and what they may cost.

Ricardo

John Recmonoit asked:




Dealing with property loans can be very stressful especially if you find yourself falling behind in payments. What are some of the ways in which you can manage the situation and get back on your feet and which is the best? You could choose to re-finance your mortgage. That is basically taking out a second loan to be able to cover the first one. Or you could choose home equity loan modification.

The second loan that you take out might have lower interest rates than the first one and a longer payment period. Ultimately at the end of the day you will be end up paying more than you had intended. Refinancing an existing loan is not a sound option for someone already facing financial problems.

You could opt to take up a home equity loan. A home equity loan will give you an amount that is equal to the difference between the current market value of your home and the balance that you still owe. The problem is even with this you still might not be able to afford the monthly payments. Instead of a home equity loan modification you might find a mortgage loan modification more preferable.

The difference is with a mortgage loan modification the conditions of your payment plan are re-negotiated to be able to meet the amount that you are able to pay per month. With this deal you do not carry the burden of a new loan. You just simply get the initial terms of your loan revised.

What makes it better than home equity loan modification is that it will avoid you incurring further debt. It works by getting your interest rate reduced, or a reduction in the principal balance that you owe. Find out from the agencies that offer this service what terms they are able to offer you and the ones you qualify for.

Lester

Lorrie Barstow asked:




Are you having difficulty repaying your college debts?

At one time or another, borrowers find that they are stuck financially and cannot go on making payments therefore they are looking for ways to postpone student loan payments. There are two ways to do this: through forbearance and deferment. Each of these methods has different requirements that a borrower must meet to qualify.

The one requirement they have in common though is that you must not be on default. If your debts are on default the lender will reserve the right to demand immediate repayment of the full remaining amount. Even if you are in the process of applying for the postponement of your repayment, keep making payments until you are approved for forbearance or deferment.

What is a deferment?

This lets you to stop paying your debts temporarily for 3 years maximum. Your interest rate will continue to accrue during the deferment period though the procedure may vary depending on the type of debt you have. If you have a subsidized Federal debt, the government pays the accrued interest. If your debt is unsubsidized, the accrued interest will be added to the principal amount.

You can apply for deferment if you are experiencing severe economic crisis, unemployed, went back to school (part-time) or deployed in the military. If you are not eligible for deferment or perhaps you have used up your deferment period already, you may opt for debt forbearance.

What is forbearance?

This is similar to debt deferment where you postpone student loan payments or have your repayment stopped or reduced. The difference is that the interest will accrue on both subsidized and unsubsidized debts and you will have to pay it. This method can allow you to stop the repayment totally or make interest only repayments. Forbearance doesn’t have any specific eligibility requirements and you can apply as many times as necessary.

Keith

Shawn P Dempsey asked:




Can you erase debt with a home equity loan or line of credit? Sort of. I am not suggesting that people go and take out a home equity loan to pay off debt. Because that is just taking on more debt to pay off debt. A no-win scenario. However, this is addressed more to the folks who already have a loan or line of credit and are not completely out of debt yet. So here are 3 ways to use a HELOC to get out of debt.

1. Eliminate High Interest Debt

Use the loan to pay off higher interest rate credit cards or loans. Most of these loans are at lower interest rates. Usually somewhere around 3% – 5%. If you have several thousands of dollars on a credit card that is at 15% then it makes sense to use the loan or line of credit to pay off the credit card. In fact if you have enough room on a HELOC to pay off other cards or loans then do it to take advantage of the lower rate and to consolidate multiple payments into one payment. Then accelerate paying off you home equity loan to get out of debt.

2. Temporary Emergency Fund

If you have $10,000 or $20,000 or more in a home equity loan or line of credit that is unused then do not use it and keep it as a backup emergency fund. Especially if you do not have the cash reserves yet for a true emergency fund. So while you are building up your real emergency fund keep the loan as a fall-back just in case anything like a job loss happens before you can build up a fully funded emergency fund of 3 to 6 months. In addition with the vastly lower interest rates on HELOC’s it makes sense to use it temporarily as an emergency fund rather than a higher rate credit card.

3. Pay It Off

Lastly you can pay off the HELOC. If you already have all of your debt paid off and you have a fully funded emergency fund, then pay off the HELOC and get rid of it. Let’s face it, ultimately any sort of home equity loan or line of credit is debt. And it needs to go. If you have no real need for it then pay it off and eliminate that debt. Do not get the wrong idea that you have to keep it just in case. It is debt and needs to be gone. This is the best option of what to do with a home equity loan.

No matter what you do be careful to fully think through the possible ramifications of using your home equity. The use of home equity potentially puts your home at risk if for some reason you can not pay back the home equity loan. Do not treat it lightly. Otherwise if you do have a home equity line of credit or loan carefully consider using it to help eliminate higher interest rate debt. Use it as a temporary emergency fund. And then pay it off and erase debt as fast as you can.

Lawrence

Derek Farley asked:




A home equity loan is a loan that is secured by the equity of the borrower’s home. Because the borrower’s home is used as security, the lender will usually offer an interest rate that is lower than it would be for an unsecured loan. The most common reasons for getting a home equity loan are paying for home improvements, paying off other debts that have a higher rate of interest, and paying for other expensive items such as a college education or medical bills.

A borrower should only seek a home equity loan if they are sure that they can repay it. If the borrower defaults then the lender could foreclose on the borrower’s home and sell it to recover their losses. A borrower must have equity in their home before applying. If the borrower’s home is worth less than the balance on their current mortgage(s) then there is no equity to borrow against.

There are two types of home equity loans – a closed end, and a line of credit. A closed end home equity loan is a lump sum that is repaid in monthly payments over five or ten years, and usually has a fixed interest rate. If the rate is fixed then it is easy to create a loan amortization schedule that shows the balance remaining on the loan after each payment. Variable rates are uncommon for this type of loan because the payments are fixed, so a change in the interest rate might mean that the payments are no longer enough to cover the interest expense. This would lead to a negative amortization, where the unpaid interest is added to the balance.

A home equity line of credit works like a giant credit card, except that there are minimum withdrawal amounts as well as fees for each withdrawal. The interest rate on this type is usually variable. Therefore, the monthly payment amount will change depending on the current interest rate and the current loan balance.

Currently, home equity loans are difficult to get unless the borrower has excellent credit and a lot of equity in their home. This is because the home equity loan will be in second position behind the first mortgage, which makes it difficult for a lender to recover any money if the borrower defaults. However, it is much easier to get if the borrower does not have a first mortgage because the equity loan would then be in first position. In that situation a borrower may find it easier to get than a traditional mortgage.

There is also a tax advantage to getting a home equity loan. The interest is usually tax deductible if the borrower’s primary residence is the home offered as security. The borrower should check the tax code or ask a tax professional for advice if they want to take advantage of this tax deduction.

Todd

Steven Turner asked:




With the average household debt increasing year by year it is not surprising that there are more people looking to consolidate credit card debt into loan payments each month instead. This is more than understandable as to pay off the average household debt paying the minimum payment each month would take 30 years.

The 30 year number isn’t one that I just pulled off the top of my head it is fact. Fact that if you continue to pay off that minimum amount each month and don’t use your card you could end up spending a large chunk of your life putting expensive meals on credit card company shareholders tables!

By taking the decision to consolidate credit card debt into loan payments you are better off and in a stronger financial situation straight away. How do I know this, well the period of a loan is just that it is the length of time it takes you to pay off the money you borrowed. So if you borrow the money over 5 years then that is how long it takes you to pay it back!

So how do you consolidate credit card debt into loan payments? Well this is pretty simple as well. You need to shop around a little to ensure you get what you are looking for, there is nothing worse than signing an agreement to discover that you are stuck with something you didn’t want for the next 5 years (or longer depending on the loan). So shop for a loan, get quotes from different companies then make your decision from there.

Important note to remember is that you are in the driving seat take your time don’t be talked into signing something there and then at that moment in time. If you are a sucker for a sales pitch and need to avoid pushy people telling you how much better off you will be if you take out THEIR loan then get the quotes online!

Try not to use an agent to get the loan. They will put a percentage on the arrangement fee and you will have to pay it back, try and go direct to the loan company where you can.

Take your time, I know that if people are pushing you for payments then you need to get them off your case but if you rush you might again end up with something that you do not need or want!

Walter

Simon Volkov asked:




Loan deferment is a special financing alternative that lets borrowers skip a payment without receiving derogatory credit reporting. The option to defer payments is available for most types of loans including mortgage, auto, credit cards, and student loans. Debtors must obtain lender approval and abide by deferment policies.

The loan deferment process involves contacting the lender, submitting a deferment application, and undergoing the application process. The actual process can vary by lender. Other factors taken into account include the borrower’s credit history, type of loan, and number of payments being deferred. Approval can take less than 24 hours to several weeks.

Borrowers should create a folder to store loan document records, along with a record of phone and email correspondence. Always keep track of phone conversations by writing down a summary of the call, date, time, and name of the bank representative spoken with. When important documents are mailed, invest in the extra protection of tracking receipts. Certified letters should be sent with a return receipt request in case it is necessary to provide evidence the documents were received.

Deferred payments are usually placed at the end of the loan and payment terms extended. The type of loan is a contributing factor as to how many payments can be skipped. On average, lenders allow borrowers two to three months to resolve financial setbacks.

Lenders may require borrowers to submit a financial letter of hardship which explains the circumstances causing them to require a loan deferment. Hardship letters are usually required with federal student loans and real estate transactions such as loan modifications.

Students attending college at least half-time can apply for in-school deferment. This option is sometimes available to post graduates who have entered into college loan consolidation. In-school deferment is only available to students enrolled in or graduated from accredited schools and cannot be used for online education tuition.

It is important to note that some banks do report deferred payments as delinquent. Therefore, it is crucial to ask lenders how they report to credit bureaus before entering into a contract. Payments reported as past due can reduce FICO scores. Depending on credit scores, a reduction of ten points can place debtors in a lower credit category; making it difficult to obtain credit in the future.

It is best to obtain a real estate forbearance agreement when deferring mortgage payments. Forbearance agreements prohibit lenders from commencing with foreclosure action unless borrowers’ default on the contract. This is of particular importance when obtaining mortgage deferment to prevent foreclosure.

Always obtain loan agreements in writing and read the fine print. One of the biggest mistakes borrowers make is entering into verbal agreements. If things go wrong there is no evidence to prove the case. Debtors should know the number of deferred payments, payment schedule, fees or penalties, and how the lender reports suspended payments to credit bureaus.

Loan deferment can help borrowers get back on their feet, but can sometimes include credit blemishes. Take time to understand the advantages and disadvantages; obtain the contract in writing; and adhere to the terms to ensure a successful outcome.

Marjorie