Calculating Interest Rates With Microsoft Excel
Posted by on Feb 18, 2009
The Rate function calculates the interest rate implicit in a set of loan or investment terms
given the number of periods (months, quarters, years or whatever), the payment per period, the present value, the future value, and, optionally, the type-of-annuity switch, and also optionally, an interest-rate guess.
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:
RATE (nper, pmt, pv, fv, type, guess)
As one example, suppose you want to calculate the implicit interest rate on a car lease for a $20,000 car that requires five years of $250-a-month payments (occurring as an annuity due) and also a $15,000 balloon payment. To do this, assuming you want to start with a guess of 10%, you can use the following formula:
=RATE(5*12,-250,20000,-15000,1)
The function returns the value .95%, which is a monthly interest rate of just less than 1%.
If you annualize this monthly rate by multiplying it by 12, you get an equivalent annual
interest rate of 11.41%.
As another example, suppose you want to calculate the implicit interest rate on a $300,000 real estate mortgage that requires thirty years of $2000-a-month payments (occurring as an ordinary annuity) but (thankfully) no balloon payment. To do this, assuming you want to start with a guess of 10%, you can use the following formula:
=RATE(30*12,-2000,300000)
The function returns the value .59%, which is a monthly interest rate of slightly more than half a percent.
If you annualize this monthly rate by multiplying it by 12, you get an equivalent annual
interest rate of 7.0203%.
A final point: Excel solves the RATE function iteratively starting with the guess argument you provide. (If you don’t provide this optional argument, Excel uses 10%.) If Excel can’t solve the RATE argument within 20 attempts, it returns the #NUM! error. You can try a different guess argument, which may help because you’re telling Excel to begin its search from a different (hopefully closer) starting point.
By: Stephen L. Nelson, CPA
About the Author:
given the number of periods (months, quarters, years or whatever), the payment per period, the present value, the future value, and, optionally, the type-of-annuity switch, and also optionally, an interest-rate guess.
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:
RATE (nper, pmt, pv, fv, type, guess)
As one example, suppose you want to calculate the implicit interest rate on a car lease for a $20,000 car that requires five years of $250-a-month payments (occurring as an annuity due) and also a $15,000 balloon payment. To do this, assuming you want to start with a guess of 10%, you can use the following formula:
=RATE(5*12,-250,20000,-15000,1)
The function returns the value .95%, which is a monthly interest rate of just less than 1%.
If you annualize this monthly rate by multiplying it by 12, you get an equivalent annual
interest rate of 11.41%.
As another example, suppose you want to calculate the implicit interest rate on a $300,000 real estate mortgage that requires thirty years of $2000-a-month payments (occurring as an ordinary annuity) but (thankfully) no balloon payment. To do this, assuming you want to start with a guess of 10%, you can use the following formula:
=RATE(30*12,-2000,300000)
The function returns the value .59%, which is a monthly interest rate of slightly more than half a percent.
If you annualize this monthly rate by multiplying it by 12, you get an equivalent annual
interest rate of 7.0203%.
A final point: Excel solves the RATE function iteratively starting with the guess argument you provide. (If you don’t provide this optional argument, Excel uses 10%.) If Excel can’t solve the RATE argument within 20 attempts, it returns the #NUM! error. You can try a different guess argument, which may help because you’re telling Excel to begin its search from a different (hopefully closer) starting point.
By: Stephen L. Nelson, CPA
About the Author:
Stephen L. Nelson is a small business tax CPA specializing in S corporations and the author of many bestselling books including the MBA’s Guide to Microsoft Excel from which this article is adapted. Nelson also edits the Forming an S corp online, the Incorporating a small business and the forming an LLC web sites.
Excel Mortgage Payment Formula
Posted in Small Business || No Comments »
Calculating the Time to Repay Loans
Posted by on Feb 17, 2009
The NPER function calculates the term, or number of regular payments, on a loan or for an investment annuity given its interest rate, the 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:
NPER (rate, pmt, pv, fv, type)
For example, to calculate the number of $1,000 monthly payments required to pay off a 9% mortgage that still has a $100,000 mortgage balance, you use the following formula:
=NPER (.09/12,-1000,100000,0,0)
The function returns the value 185.53, representing roughly 185 payments and then another
roughly half payment. Notice that to convert the 9% annual interest to a period interest, the
formula divides the annual interest rate by 12. Notice, too, that the payment amount, as a
cash outflow, shows as a negative value while the loan balance, as an implicit cash inflow,
shows as a positive value.
NOTE The NPER function rarely returns an integer, or whole-number result. As in the preceding
example, it commonly returns a fractional value, indicating that after the last regular payment, an additional fractional payment will also need to be made.
You can also use the NPER function to calculate investment terms. In this case, you calculate
the number of payments that need to be made in order to reach some future value.
Suppose, for example, that you want to calculate how many years a customer needs to contribute
$2,000 to an Individual Retirement Account in order to amass a $1,000,000 portfolio.
If you assume the customer will earn 9% annually and will make payments at the beginning of the year, you use the following formula to make this estimate:
=NPER (.09,-2000,0,1000000,1)
The function returns the value 43.45, indicating the $2,000 payments will need to be made
for slightly more than 43 years. Notice that the type switch is 1, which means that the function
returns the amount that must be paid at the beginning of the year. If you instead want
to calculate the amount that would need to be paid at the beginning of each year, you would
use the following formula to make this estimate:
=NPER (.09,-2000,0,1000000,0)
This formula returns the value 44.43. This value is slightly more than the annuity due value
because by making payments at year-end, the customer loses interest.
If you wanted to make the same calculation but recognize the added fact that the customer
already has $5,000 in his IRA account, you would use the formula:
=NPER (.09,-2000,-5000,1000000,0)
This formula returns the value 42.07.
By: Stephen L. Nelson, CPA
About the Author:
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:
NPER (rate, pmt, pv, fv, type)
For example, to calculate the number of $1,000 monthly payments required to pay off a 9% mortgage that still has a $100,000 mortgage balance, you use the following formula:
=NPER (.09/12,-1000,100000,0,0)
The function returns the value 185.53, representing roughly 185 payments and then another
roughly half payment. Notice that to convert the 9% annual interest to a period interest, the
formula divides the annual interest rate by 12. Notice, too, that the payment amount, as a
cash outflow, shows as a negative value while the loan balance, as an implicit cash inflow,
shows as a positive value.
NOTE The NPER function rarely returns an integer, or whole-number result. As in the preceding
example, it commonly returns a fractional value, indicating that after the last regular payment, an additional fractional payment will also need to be made.
You can also use the NPER function to calculate investment terms. In this case, you calculate
the number of payments that need to be made in order to reach some future value.
Suppose, for example, that you want to calculate how many years a customer needs to contribute
$2,000 to an Individual Retirement Account in order to amass a $1,000,000 portfolio.
If you assume the customer will earn 9% annually and will make payments at the beginning of the year, you use the following formula to make this estimate:
=NPER (.09,-2000,0,1000000,1)
The function returns the value 43.45, indicating the $2,000 payments will need to be made
for slightly more than 43 years. Notice that the type switch is 1, which means that the function
returns the amount that must be paid at the beginning of the year. If you instead want
to calculate the amount that would need to be paid at the beginning of each year, you would
use the following formula to make this estimate:
=NPER (.09,-2000,0,1000000,0)
This formula returns the value 44.43. This value is slightly more than the annuity due value
because by making payments at year-end, the customer loses interest.
If you wanted to make the same calculation but recognize the added fact that the customer
already has $5,000 in his IRA account, you would use the formula:
=NPER (.09,-2000,-5000,1000000,0)
This formula returns the value 42.07.
By: Stephen L. Nelson, CPA
About the Author:
Stephen L. Nelson is a Bellevue, Washington CPA and the author of many bestselling computer books including the MBA’s Guide to Microsoft Excel from which this article is adapted. Nelson also edits the popular tax web sites forming an s corp online, the incorporating a small business, and the forming an LLC .
Posted in Small Business || No Comments »
How To Actually Calculate Loan Payments
Posted by on Feb 16, 2009
Acquiring loans is a comparatively simple task compared to the difficulty in calculating the loan payments. It is necessary that you can make a few of these calculations by yourself rather than always having to depend on the lender to provide you with the exact figures. One of the best and easiest methods of calculating your loan interest is with the help of the Internet.
There are loan calculators, which help you calculate the interest and repayments on your loan. There is a difference when calculating interest for mortgages, car loans, credit cards etc., so you will have to select the right calculator that suits your needs. In this way, you can ensure that the calculations provided are accurate.
A mortgage calculator helps you calculate the amount that you are capable of borrowing which will help you in your purchase of property. These calculators can also be used to calculate and compare the interest rates and the costs of various loans. Apart from checking costs you can calculate the effect repayment has on your finances when the time of payment differs. This will help you reach a decision on whether you want to make bi-weekly payments or monthly payments.
If there are changes that may affect repayment of the loan, you are able to calculate the extra damage it can cause to your cash flow. These calculators help you to calculate and clear all your queries regarding interest rates, affordability, and changes in the terms that will affect the loan etc. To a certain extent, the calculator will also help you to find the loan that fits your requirements.
If you are considering or have already taken up the Home Equity Line Of Credit (HELOC), which follows the variable interest rate then a mortgage calculator will also help you determine the payments you will be required to make. These calculators will help you calculate the payments on all types of loans be it with fixed interest rates, variable interest rates and even amortized loans. It provides you with all the different calculations that you may require to make the right decision.
You also have the option of doing it yourself by using an excel sheet on your computer by applying the right formula. The formula that you can use in your excel sheet is the Pmt Formula.
=Pmt (Rate, Nper, PV) formula
where
Rate is your periodic rate
Nper is the number of payments and
PV is your present value.
The commonly used formulas that are used for calculating loan payments are as follows:
PMT (Rate, Nper, -Loan Amount)
PPMT (Rate, Which Period, Nper, -Loan Amount)
NPER (Rate, Pmt, -Loan Amount)
RATE (Nper, Pmt, -Loan Amount)
PV (Rate, Nper, Pmt)
However it is the online calculators that allows for easy and accurate calculations.
By: Petra Amelia
About the Author:
There are loan calculators, which help you calculate the interest and repayments on your loan. There is a difference when calculating interest for mortgages, car loans, credit cards etc., so you will have to select the right calculator that suits your needs. In this way, you can ensure that the calculations provided are accurate.
A mortgage calculator helps you calculate the amount that you are capable of borrowing which will help you in your purchase of property. These calculators can also be used to calculate and compare the interest rates and the costs of various loans. Apart from checking costs you can calculate the effect repayment has on your finances when the time of payment differs. This will help you reach a decision on whether you want to make bi-weekly payments or monthly payments.
If there are changes that may affect repayment of the loan, you are able to calculate the extra damage it can cause to your cash flow. These calculators help you to calculate and clear all your queries regarding interest rates, affordability, and changes in the terms that will affect the loan etc. To a certain extent, the calculator will also help you to find the loan that fits your requirements.
If you are considering or have already taken up the Home Equity Line Of Credit (HELOC), which follows the variable interest rate then a mortgage calculator will also help you determine the payments you will be required to make. These calculators will help you calculate the payments on all types of loans be it with fixed interest rates, variable interest rates and even amortized loans. It provides you with all the different calculations that you may require to make the right decision.
You also have the option of doing it yourself by using an excel sheet on your computer by applying the right formula. The formula that you can use in your excel sheet is the Pmt Formula.
=Pmt (Rate, Nper, PV) formula
where
Rate is your periodic rate
Nper is the number of payments and
PV is your present value.
The commonly used formulas that are used for calculating loan payments are as follows:
PMT (Rate, Nper, -Loan Amount)
PPMT (Rate, Which Period, Nper, -Loan Amount)
NPER (Rate, Pmt, -Loan Amount)
RATE (Nper, Pmt, -Loan Amount)
PV (Rate, Nper, Pmt)
However it is the online calculators that allows for easy and accurate calculations.
By: Petra Amelia
About the Author:
Calculating loan repayments is easy when you have the right tools. Learn more about your home equity loan and how to save money with your monthly repayments.
Posted in Finance || No Comments »
Forecasting Future Values With Microsoft Excel
Posted by on Feb 15, 2009
The FV function calculates the future value of a loan or investment given its interest rate,
the term (or number of payments), the payment, the present value (or loan balance), 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:
FV (rate, nper, pmt, pv, type)
For example, to calculate the future value of a $200-a-month savings program over 25 years
assuming that the investor starts with $10,000 and earns 10% annual interest, you use the
following formula:
=FV (10%/12,25*12,-200,-10000,0)
The function returns the value 385936.13. Notice that to convert the 10% annual interest to a monthly interest rate, the formula divides the annual interest rate by 12. Notice, too,
that to convert the 25-year term to a term in months, the formula multiplies 25 by 12. The
monthly payment and initial present values show as negative amounts because they represent
cash outflows. And the function returns the future value amount as a positive value because it reflects a cash inflow the investor ultimately receives.
You can also use the FV function to estimate loan balloon payment amounts. Suppose, for example, that you want to calculate the balloon payment required to pay off a $150,000 mortgage with an 8% annual interest rate after the buyer has been making $1,200-a-month payments for 10 years. You use the following formula to make this estimate:
=FV (8%/12,10*12,-1200,150000,0)
The function returns the value –113410.79. Notice that the interest rate is divided by 12 and the number of years of payments is multiplied by 12 to adjust these figures to monthly amounts. Also, notice that the monthly payment amount shows as a negative value to show it represents a cash outflow, and the initial loan balance shows as a positive value to show that it represents a cash inflow.
By: Stephen L. Nelson, CPA
About the Author:
the term (or number of payments), the payment, the present value (or loan balance), 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:
FV (rate, nper, pmt, pv, type)
For example, to calculate the future value of a $200-a-month savings program over 25 years
assuming that the investor starts with $10,000 and earns 10% annual interest, you use the
following formula:
=FV (10%/12,25*12,-200,-10000,0)
The function returns the value 385936.13. Notice that to convert the 10% annual interest to a monthly interest rate, the formula divides the annual interest rate by 12. Notice, too,
that to convert the 25-year term to a term in months, the formula multiplies 25 by 12. The
monthly payment and initial present values show as negative amounts because they represent
cash outflows. And the function returns the future value amount as a positive value because it reflects a cash inflow the investor ultimately receives.
You can also use the FV function to estimate loan balloon payment amounts. Suppose, for example, that you want to calculate the balloon payment required to pay off a $150,000 mortgage with an 8% annual interest rate after the buyer has been making $1,200-a-month payments for 10 years. You use the following formula to make this estimate:
=FV (8%/12,10*12,-1200,150000,0)
The function returns the value –113410.79. Notice that the interest rate is divided by 12 and the number of years of payments is multiplied by 12 to adjust these figures to monthly amounts. Also, notice that the monthly payment amount shows as a negative value to show it represents a cash outflow, and the initial loan balance shows as a positive value to show that it represents a cash inflow.
By: Stephen L. Nelson, CPA
About the Author:
Stephen L. Nelson is a Redmond, Washington CPA and the author of many bestselling books including the MBA’s Guide to Microsoft Excel from which this article is adapted. Nelson also edits the forming an s corp , the incorporating a small business and the forming an LLC web sites.
Posted in Small Business || No Comments »
Calculating Present Values With Microsoft Excel
Posted by on Feb 12, 2009
The PV function calculates the present value of an annuity, or future value, given the periodic
rate, number of periods, payment, future value (or balloon payment), and, optionally,
the type-of-annuity switch.
Sometimes, why you would use this function seems strange. But it’s often useful when working with loans or with investments. For example, if you want to know the current day value of a stream of future payments (such an annuity), you can use the PV function. Or if you want to estimate the value of an investment that pays a regular payment for a certain number of months or years, you can use the PV function.
Typically, the function uses the following syntax:
PV (rate, nper, pmt, fv, type)
For example, if you want to estimate the outstanding balance on a mortgage loan that charges 8%, requires two hundred more $1,000-a-month payments, and also requires a $10,000
balloon payment, you can use the following formula:
=PV (.08/12,200,-1000,-10000)
The function returns the value $112,932.75.
TIP: If you have Excel running on the computer you’re reading this article on, you can copy the above formula to a cell in an Excel workbook and make the actual present value calculation yourself.
As mentioned, the PV function includes a type-of-annuity switch you use to specify whether the payments occur at the beginning of the period (start of the month or year) or at the end of the period (end of the month or year). 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.
And a final note: You must include either the payment (or pmt) argument or the future value (or fv) argument in order to calculate the present value. The PV function, predictably, needs something—either a payment stream or a future value—to calculate the present value of.
By: Stephen L. Nelson, CPA
About the Author:
rate, number of periods, payment, future value (or balloon payment), and, optionally,
the type-of-annuity switch.
Sometimes, why you would use this function seems strange. But it’s often useful when working with loans or with investments. For example, if you want to know the current day value of a stream of future payments (such an annuity), you can use the PV function. Or if you want to estimate the value of an investment that pays a regular payment for a certain number of months or years, you can use the PV function.
Typically, the function uses the following syntax:
PV (rate, nper, pmt, fv, type)
For example, if you want to estimate the outstanding balance on a mortgage loan that charges 8%, requires two hundred more $1,000-a-month payments, and also requires a $10,000
balloon payment, you can use the following formula:
=PV (.08/12,200,-1000,-10000)
The function returns the value $112,932.75.
TIP: If you have Excel running on the computer you’re reading this article on, you can copy the above formula to a cell in an Excel workbook and make the actual present value calculation yourself.
As mentioned, the PV function includes a type-of-annuity switch you use to specify whether the payments occur at the beginning of the period (start of the month or year) or at the end of the period (end of the month or year). 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.
And a final note: You must include either the payment (or pmt) argument or the future value (or fv) argument in order to calculate the present value. The PV function, predictably, needs something—either a payment stream or a future value—to calculate the present value of.
By: Stephen L. Nelson, CPA
About the Author:
Stephen L. Nelson is a Redmond, Washington CPA and the author of many bestselling books including the MBA’s Guide to Microsoft Excel from which this article is adapted. Nelson also edits the forming an s corp , the incorporating a small business and the forming an LLC web sites.
Posted in Small Business || No Comments »
What Lenders Look For: Good Credit Improves your Mortgage Negotiations
Posted by on Feb 11, 2009
Contrary to what you may think, you don’t manage your credit applications and payments in a vacuum. Your credit behavior (as some have learned the hard way) is tracked by credit bureaus such as Equifax Canada and TransUnion of Canada.
This information is tabulated, and then you are assigned a credit rating. It’s important for you to maintain as high a rating as possible. The following information shows you how you can be sure to earn a good score, and why it’s so important to do so.
Lenders Have Access To This Information.
Think about it. When you decide to apply for a mortgage for a home purchase, or a hefty loan for home renovation - don’t you want A+ right up there beside your good name?
Your Good Name Is Really What It’s All About.
In the financial world, your credit profile is your reputation. If you have a good record, it means smooth sailing ahead for you. If your record isn’t all it should be, you might be in for a bit of rough weather when it comes to acquiring the monies you need — at the interest rates you want.
Your Payment History.
Credit card debt — is one of the most important factors considered when your score is being tabulated. Any missed, late, or neglected payments are duly noted. Not only does a prompt payment history buff your credit image — it saves you money in interest, and assures a quicker retiring of that debt too.
Timeliness Of Payments.
Actual amount of payments, the state of your credit card balances versus credit available, the number of cards you own, the frequency of your requests for more credit - These are just some of the tidbits of personal financial information that make up your credit profile. This comprehensive history is compiled to show lenders how reliable a debt risk you are. To put it simply they want to know whether or not you are credit worthy.
Your credit score is established with a mathematical formula.
Various factors are weighed and balanced and given a certain percentage value towards your final score. Credit bureaus also take into consideration — in addition to factors already mentioned — your existing debt burden, your actual and potential income (remember you do give out these details when you apply for credit), your debt to income ratio, your past financial problems (any bankruptcy or foreclosure remains a long time on record), your job stability -
essentially any piece of public information that helps build an accurate as possible risk assessment of you as debtor.
Your Credit Rating Is A Fluid And An Ever-Changing Thing.
It is dependent upon your present financial circumstances and any actions you make. The credit bureaus always follow your money trail. Because the formation of your profile is an on going thing, it’s vital for you to consistently practice reliable and responsible debt handling. The good news? The ever-changing quality of your credit rating allows you to continually aim for a higher score. Think of your rating — not as a burden — but as a challenge and an opportunity.
Infrequent Requests For Additional Credit?
That’s a really good sign to a lender. Keep in mind that mortgage and loan shopping won’t impact you negatively if it’s done in a concentrated time period. The credit bureaus interpret this flurry of activity positively — as long as it doesn’t occur too frequently. You want to look savvy, not desperate.
How Much Plastic Is Too Much?
Too many credit cards red flag you to potential lenders. Limit your cards to three or four, and try to maintain longtime use of at least one card. This is a key way to build up an excellent credit history. The amount of credit you use, versus credit available, is really telling too. Keep your balances low.
It’s Your Right To Pull Up Your Credit Report Profile.
This is something that is in your interest to do so. (You can do this online at www.equifax.com). Experts advise you to check it out at least once a year. Doing so gives you the opportunity to correct any errors or misinformation that may be there. Practice reliable and responsible debt management.
Then, when you do actually need money for a major undertaking (like the purchase of a home), your credit rating will be an asset, not a liability.
By: The House Team Of Mortgage Intellingence
About the Author:
This information is tabulated, and then you are assigned a credit rating. It’s important for you to maintain as high a rating as possible. The following information shows you how you can be sure to earn a good score, and why it’s so important to do so.
Lenders Have Access To This Information.
Think about it. When you decide to apply for a mortgage for a home purchase, or a hefty loan for home renovation - don’t you want A+ right up there beside your good name?
Your Good Name Is Really What It’s All About.
In the financial world, your credit profile is your reputation. If you have a good record, it means smooth sailing ahead for you. If your record isn’t all it should be, you might be in for a bit of rough weather when it comes to acquiring the monies you need — at the interest rates you want.
Your Payment History.
Credit card debt — is one of the most important factors considered when your score is being tabulated. Any missed, late, or neglected payments are duly noted. Not only does a prompt payment history buff your credit image — it saves you money in interest, and assures a quicker retiring of that debt too.
Timeliness Of Payments.
Actual amount of payments, the state of your credit card balances versus credit available, the number of cards you own, the frequency of your requests for more credit - These are just some of the tidbits of personal financial information that make up your credit profile. This comprehensive history is compiled to show lenders how reliable a debt risk you are. To put it simply they want to know whether or not you are credit worthy.
Your credit score is established with a mathematical formula.
Various factors are weighed and balanced and given a certain percentage value towards your final score. Credit bureaus also take into consideration — in addition to factors already mentioned — your existing debt burden, your actual and potential income (remember you do give out these details when you apply for credit), your debt to income ratio, your past financial problems (any bankruptcy or foreclosure remains a long time on record), your job stability -
essentially any piece of public information that helps build an accurate as possible risk assessment of you as debtor.
Your Credit Rating Is A Fluid And An Ever-Changing Thing.
It is dependent upon your present financial circumstances and any actions you make. The credit bureaus always follow your money trail. Because the formation of your profile is an on going thing, it’s vital for you to consistently practice reliable and responsible debt handling. The good news? The ever-changing quality of your credit rating allows you to continually aim for a higher score. Think of your rating — not as a burden — but as a challenge and an opportunity.
Infrequent Requests For Additional Credit?
That’s a really good sign to a lender. Keep in mind that mortgage and loan shopping won’t impact you negatively if it’s done in a concentrated time period. The credit bureaus interpret this flurry of activity positively — as long as it doesn’t occur too frequently. You want to look savvy, not desperate.
How Much Plastic Is Too Much?
Too many credit cards red flag you to potential lenders. Limit your cards to three or four, and try to maintain longtime use of at least one card. This is a key way to build up an excellent credit history. The amount of credit you use, versus credit available, is really telling too. Keep your balances low.
It’s Your Right To Pull Up Your Credit Report Profile.
This is something that is in your interest to do so. (You can do this online at www.equifax.com). Experts advise you to check it out at least once a year. Doing so gives you the opportunity to correct any errors or misinformation that may be there. Practice reliable and responsible debt management.
Then, when you do actually need money for a major undertaking (like the purchase of a home), your credit rating will be an asset, not a liability.
By: The House Team Of Mortgage Intellingence
About the Author:
The House Team is commited to providing quality information to help people make informed decisions about their mortgage financing needs.
Compare Ontario Mortgage Rates with the traditional banks.
Need a mortgage calculator? Click Here Mortgage Calculator Ontario
Posted in Credit || No Comments »
Why Should I Use Mortgage Rate Tables
Posted by on Feb 6, 2009
Mortgage Rate Tables are tools that help answer questions you may have when deciding that you need to borrow money to purchase real estate. Whether you need a basic tool or are ready to use the more advanced ones, both are available. Websites have tables automatically programmed to calculate your facts and figures on their calculators within these handy tables.
Income is usually the first information that you will enter. To calculate your income you will just need a few figures, and how to process them. Monthly income is the most common one used. First you will multiply your weekly income times 52, next you will divide that figure by 12. Assuming that you work 52 weeks per year, this is your average weekly income.
Realizing that some people do not work 52 weeks per year, you can also use your previous year tax form. Your total income from the previous year divided by 12 will also get you this same figure, and you will need to keep this paperwork handy because your lender will probably need it.
After calculating your income you the amount you would like to borrow will be asked. Small town and houses in less developed areas usually sell around $75,000. If you are looking in suburban or city areas, you will need to look at about $200,000. If you want to get a better idea of housing prices in the area you want to live in you can look newspapers, online, or in real estate magazines.
You are likely to see interest rate options next. This may not be something you are familiar with, so checking out some websites that show averages will help, keep in mind you will also need to consider your credit score. Finding a rate a bit higher than what you expect to get as a result of your credit score will be beneficial. Keying in this information will give you a possible figure for your monthly payment.
If you would like to enter your debts as well, you can use advanced tables. This will give you a true picture of the amounts of debt and credit you have. Too much debt will mean that the amount of money you can borrow will be less.
You can also find tables that include much more information than just the basic calculators. Month to month interest rate comparisons will be on some. While still others will show you rate comparisons that can be obtained by changing some of the terms.
If you have ever used an excel spreadsheet, you will find that these mortgage tables are just as easy to use. The numbers you have are entered into the tables are in a chart format, they will be applied to formulas that will give you the numbers and specifics that you are looking for. Because these tables are easy to use, it will be easy to get the information that you need.
By: Adam Hefner
About the Author:
Income is usually the first information that you will enter. To calculate your income you will just need a few figures, and how to process them. Monthly income is the most common one used. First you will multiply your weekly income times 52, next you will divide that figure by 12. Assuming that you work 52 weeks per year, this is your average weekly income.
Realizing that some people do not work 52 weeks per year, you can also use your previous year tax form. Your total income from the previous year divided by 12 will also get you this same figure, and you will need to keep this paperwork handy because your lender will probably need it.
After calculating your income you the amount you would like to borrow will be asked. Small town and houses in less developed areas usually sell around $75,000. If you are looking in suburban or city areas, you will need to look at about $200,000. If you want to get a better idea of housing prices in the area you want to live in you can look newspapers, online, or in real estate magazines.
You are likely to see interest rate options next. This may not be something you are familiar with, so checking out some websites that show averages will help, keep in mind you will also need to consider your credit score. Finding a rate a bit higher than what you expect to get as a result of your credit score will be beneficial. Keying in this information will give you a possible figure for your monthly payment.
If you would like to enter your debts as well, you can use advanced tables. This will give you a true picture of the amounts of debt and credit you have. Too much debt will mean that the amount of money you can borrow will be less.
You can also find tables that include much more information than just the basic calculators. Month to month interest rate comparisons will be on some. While still others will show you rate comparisons that can be obtained by changing some of the terms.
If you have ever used an excel spreadsheet, you will find that these mortgage tables are just as easy to use. The numbers you have are entered into the tables are in a chart format, they will be applied to formulas that will give you the numbers and specifics that you are looking for. Because these tables are easy to use, it will be easy to get the information that you need.
By: Adam Hefner
About the Author:
http://www.MortgageLoans-101.com is a website fully devoted to providing you with the best information for your mortgage loans needs. Whether your looking for more information on mortgage rate tables or you would simply like to know your calculated needs, we have you covered!
Excel Mortgage Payment Formula
Posted in Mortgage || No Comments »