Dec 122017
 
Home buying and refinancing calculator.
File HBR20.ZIP from The Programmer’s Corner in
Category Financial and Statistics
Home buying and refinancing calculator.
File Name File Size Zip Size Zip Type
HOMEBUY.DIR 310 127 deflated
HOMEBUY.DOC 30852 9434 deflated
HOMEBUY.EXE 233164 106362 deflated
SAMPLE1.DAT 6243 1702 deflated
SAMPLE2.DAT 6243 1564 deflated
SAMPLE3.DAT 6243 1755 deflated
SAMPLE4.DAT 6243 1834 deflated
SAMPLE5.DAT 6083 1715 deflated

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Contents of the HOMEBUY.DOC file


***********************************************************************
* This file serves as the on-line user's guide to Homebuying and *
* Refinancing 2.0. Once the program is started you can access this *
* file from the Main Menu and select individual sections to look *
* at or print the entire guide with appropriate breaks. *
***********************************************************************

[1]
1) Overview

Homebuying and Refinancing 2.0 is much more than just another loan
amortization program. Its comprehensive financial analysis of buying
or refinancing a home, or prepaying an existing mortgage can help
homebuyers and homeowners save thousands of dollars. Perspective
homebuyers will find the program's analysis of buying a home versus
renting indispensable. Real estate agents can increase the level of
service they provide to their clientele by using the program to create
quick a nd accurate homebuying analysis reports.

Homebuying and Refinancing 2.0 is the premier home purchase analysis
program designed for the homebuyer, homeowner, or real estate agent.
For the homebuyer the program determines total yearly and monthly costs
(PITI, points, and expenses), after-tax costs, and present value costs
for several types of loans including fixed and adjustable rate. The
program also rates a homebuyer's chances of loan approval and compares
the cost of buying a home versus renting. For the homeowner the
program helps evaluate the financial consequences of making prepayments
or refinancing an existing loan. Refinancing results include
calculation of monthly payment savings, total present value savings
over loan life, and break-even times for a wide range of interest rates
and points. For the real estate agent, the program produces a
professional looking package of clear and straightforward results with
a customized cover page.

Homebuying and Refinancing 2.0 is an easy-to-use menu driven program
with pop-up pick lists, context sensitive help, and an on-line users'
guide. Many of the program's data items have default values which the
user can accept or easily change. Although the program contains the
most recent IRS tax parameters, the user can change these items so the
program's tax calculations stay accurate in future years without the
need for yearly updates. Additionally, a user can change the program's
loan qualification criteria to account for variations between regions
of the country and lending institutions. The program also allows a
user to save and recall cost analysis data to disk (several sample data
files are distributed with the program). The program will run on any
IBM-compatible PC with at least 256K of available memory. The
shareware registration fee is $30.

Homebuying and Refinancing 2.0 represents a major upgrade to my
previous program, BuyAHome 1.4. Although BuyAHome 1.4 has been rated
the best home purchase shareware program on the market (PsL News review
of similar programs, 9/90), my new program is greatly expanded in both
usefulness and functionality. The major enhancements found in the new
program include: analysis of refinancing, analysis of buying versus
renting, escalation of income, file saving and recalling of data and
results, pop-up pick lists, customized report cover page, and user
definable loan qualification criteria. If you have any questions about
Homebuying and Refinancing 2.0 please write or call Tim Byers at the
address or phone number listed throughout the program or send a
CompuServe mail message to 73757,1256.

Homebuying and Refinancing 2.0 is distributed as a shareware (try-
before-you-buy) program. If, after a reasonable testing period, the
program proves useful to you then you are required to either register
the shareware version or order the retail version. To find out how to
register Homebuying and Refinancing 2.0 and the benefits for doing so,
please select the appropriate option from the main menu screen.

_______
____|__ | (tm)
--| | |-------------------
| ____|__ | Association of
| | |_| Shareware
|__| o | Professionals
-----| | |---------------------
|___|___| MEMBER

This program is produced by a member of the Association of Shareware
Professionals (ASP). ASP wants to make sure that the shareware
principle works for you. If you are unable to resolve a shareware
related problem with an ASP member by contacting the member directly,
ASP may be able to help. The ASP Ombudsman can help you resolve a
dispute or problem with an ASP member, but does not provide technical
support for members' products. Please write to the ASP Ombudsman at
545 Grover Road, Muskegon, MI 49442-9247 or send a CompuServe message
via CompuServe Mail to ASP Ombudsman 70007,3536.

[2]
2) Moving Around the Program

To choose a menu option move the pointer to the appropriate choice and
press ENTER, or just press the number associated with the desired menu
option. To fill out the program's input screens simply type in a
response to the corresponding question and press either the ENTER key
or the up and down ARROW keys. If the program detects an error in an
input response the program sounds an audible reply and displays a 2
line error message near the bottom of the screen. At this point either
type in a new response or press the ESCAPE key to redisplay the last
correct response. The ESCAPE key can also be used to move the user
immediately to the beginning of the previous screen. Pressing F1 when
{F1 Help} is displayed causes 2 lines of context sensitive help text to
be displayed at the bottom of the current screen. Also, pressing F10,
when the phrase {F10 Change to Monochrome} or {F10 Change to Color} is
displayed, will cause the color of the input bar to change.

[3]
3) Functionality of Utilities


--- Change Cover Page Information ---

The program allows a user to create a customized cover page in front of
the printed results by typing in information on each of the following
items:

Company

Office

Agent

Customer

If you do not want a cover page printed with each report then change
the answer to "No" for "Print cover page before reports (Y/n)?"

By pressing the appropriate function key a user can save the cover
information to a file which the program looks when it starts up.

--- Change IRS Tax Rate Parameters ---

Homebuying and Refinancing 2.0 uses the calculations found in the 1991
IRS Tax Rate Schedules and the Standard Deduction Chart. These values
can be changed by the user to keep the program's tax parameters current
with future IRS rate changes. The option to change the IRS tax
schedules is accessed from Homebuying and Refinancing 2.0's Main Menu.
Following is a list of the program's IRS tax parameters and a
discussion of each item:

Amount of deduction per exemption ($): Amount of IRS tax deduction
per claimed exemption.

Tax rates (%): The 3 tax rates currently used by the IRS to
determine an individual's tax. Homebuying and Refinancing
2.0 's 1991 default values are 15, 28, and 31 percent.

Income limit per tax rate per filing status ($): These income
limits are critical to the calculations of after-tax values.
Homebuying and Refinancing 2.0's default values, as well as
the programs tax calculations, are taken from the 1991 IRS
1040 manuals.

Standard deductions per filing status ($): The IRS tax deduction
for each filing status. This is important in figuring out the
tax savings associated with a buying a home. If the user's
non-housing deductions are less than the user's standard
deduction then some of the housing deductions will not be
available to reduce the user's effective taxes. In some cases
it is even possible for the after-tax cost to equal the
before-tax cost. This occurs when the non-housing deductions
plus housing deductions* are less than the standard deduction
(usually late in the life of the loan).

Full deduction limit ($): The IRS limit at which the amount of
deduction per exemption begins to be lowered.

A change made to any of the data items within the IRS Tax Parameter
screen will produce a change in the screen's subtitle from Homebuying
and Refinancing 2.0's default values to User defined values. To
redisplay Homebuying and Refinancing 2.0's default values press the F4
function key.

* Housing deductions in Homebuying and Refinancing 2.0 include:
the loan's interest payments, property taxes, and points (when
appropriate).


--- Change Loan Qualifying Criteria ---

Homebuying and Refinancing 2.0's criteria for determining the chances
of loan approval can be changed with this utility. The loan criteria
parameters can be changed separately for FHA, VA, and conventionally
backed loans to account for variations between different institutions
and regions of the country. By pressing the appropriate function key a
user can save user defined criteria to a file which the program looks
when it starts up.

[4]
4) Entering Homebuying Data

To properly evaluate the total cost of buying a home, Homebuying and
Refinancing 2.0 requires user response to questions in the following 4
areas:

1) Loan Information - the total purchase price, amount of down
payment, type of mortgage, length of loan, number of points,
etc...

2) Expenses - Property tax, closing costs, homeowners insurance,
mortgage default insurance, etc...

3) Tax Information - Number of exemptions, yearly income,
non-housing deductions, state income tax rate.

4) Time Value of Money - Estimated inflation rate, present value
date which total home costs will be discounted to, and length of
homebuying analysis.

After input is supplied to each of the above areas Homebuying and
Refinancing 2.0 quickly calculates the total yearly costs of buying the
home and provides a result menu with various display options.

The unit of value for each input data item is shown after the item's
name. For example, consider the data item - Amount of Loan ($) - the
unit of value is dollars. All input values must be entered as numbers
(commas are optional). Also, the input values are either whole numbers
(no decimal points) or real numbers (decimal points allowed). For the
most part all dollars ($), dollars per year ($/yr), and number (#) data
items must be entered as whole numbers, whereas percent (%) data items
may be entered as real numbers.

--- Loan Information ---

Following is a list of Homebuying and Refinancing 2.0's loan
information data items with a description of each one:

Description: Identifies a particular home buying scenario
with up to 50 characters of text.

Purchase price of home ($): Amount of money which will be
paid for the house. Do not include closing costs, loan
points, etc. - these will be entered later in the program.
Input range, whole number between 100 and 900,000.

Down payment ($ or %): The amount and percentage of down payment
that will be paid to the seller up-front. Homebuying and
Refinancing 2.0 will automatically change this value if the
next data item (Amount of Loan) is modified. Input range, any
amount less than the purchase price.

Amount of loan ($): The portion of the purchase price remaining to
be paid after making the down payment. The loan amount must
be less than the purchase price or else an input error will
occur. Input range, whole number between 100 and the Purchase
Price of Home (default = Purchase Price - Down Payment).

Loan Backed By: FHA, VA, Conventional backer can be selected. The
program's user definable criteria can be separately changed
for each different backer.

Type of Mortgage: (4 choices)
Fixed Rate: Interest rate remains the same (fixed) during the
life of the loan. This is the most common type of
mortgage.

Adjustable Rate Mortgage (ARM): Interest rate changes
(and hence payments) during the life of the loan
based on one of several indices (eg. 1-year Treasury
rate). It is a good idea to run several possible
interest rate scenarios to ascertain how an ARM
might perform.

Price Level Adjusted Mortgage (PLAM): A fully amortized
mortgage whose monthly payments are constant in
purchasing power over the loan's life. A PLAM is
calculated by multiplying the loan's balance at year end
by (1 + rate of inflation). A PLAM is designed to allow
families to initially have much lower monthly loan
payments than for comparable fixed rate mortgages or
ARMs. It is assumed the monthly payments will rise at a
rate less than or equal to the rise in a family's income.
Given the economic conditions at the end of 1989 a PLAM's
interest rate will probably be 4 percent (compared to
10.5% for a fixed rate). Current HUD and IRS plans call
for a PLAM's principal schedule to equal that of a fixed
rate's principal schedule at the same interest rate.

Two-step (TSM): A new type of 30 year mortgage introduced by
Fannie Mae in 1990. The loan consists of two rate
intervals: an initial 7 year period and a final 23 year
period. The first interval has a rate approximately 0.6%
lower than a normal 30 year fixed. This rate is adjusted
at the end of 7 years based on the current interest rate
of a T-Bill plus a small margin. This adjustment should
be fairly uncommon since most people move before 7 years.

Length of loan (yrs): The total number of years during which the
loan will be paid back. Input range: whole number between 1
and 40.

Date of first payment (mon,yr): Month and year that 1st loan
payment is due, Homebuying and Refinancing 2.0 assumes that
the closing date is equal to the 1st mortgage payment date.
Input range: whole number between 1 and 12 for the month and
between 1950 and 2010 for the year (default values are the
current month plus 1 and the current year).

Points charged for loan (#): Each point is equal to 1 percent of
the loan's value. Points are usually assessed by lenders as a
condition for making the loan. Most lending companies allow
borrowers to buy-down (decrease) a loan's interest rate by
increasing the number of points charged for the loan.
Homebuying and Refinancing 2.0 is an excellent tool for
comparing these types of options. Input range: any number
between 0 and 10.

Points tax deductible?
Yes, in first year: Points charged for this type of loan are
entirely deductible in the loan's first year. This is
typical loan to buy or build a primary residence.

Yes, over life of loan: Points charged for this type of loan
are deducted over the loan's life. This is typical of a
loan to refinance a mortgage on a first home or to buy a
second home.

No: Points charged for this type of loan are not deductible
at all. This only applies to a relatively obscure type
of loan.

Interest rate (%): Rate applied during a specified interval of
the loan. A user is only allowed to change interest rates on
an ARM. However, multiple intervals can be used to analyze
extra payment options for any type of Homebuying and
Refinancing 2.0 mortgage. Input range, any number between 1
and 25.

Length of interval (yrs): Length of a period during the loan's
life. Input range, whole number between 1 and the number of
years left on the loan.

Extra payment ($/mon): Amount of prepayment or extra payment, in
dollars per month, during a period of the loan's life. NOTE:
Some loans carry a prepayment penalty, check with your lender.
Input range, whole number between 1 and 990.

--- Expenses ---

Following is a list of Homebuying and Refinancing 2.0's expense data
items with a description of each one:

Property tax rate (%): Taxes paid by homeowners for schools,
public works, etc. The amount of tax is based on a percentage
of the assessed value of the house. Input range: any number
between 0 AND 5!

Assessed house value ($): Valuation of the house for the purpose
of taxation. Depending on the locale, the assessment may or
may not reflect the market value of the house. Input range:
whole number between 0 AND 990,000 (default = purchase price
of home).

Property Tax escalation rate (%/yr): The percentage that the
property tax will increase per year.

Closing costs ($): Additional expenses over and above the down
payment needed to secure the loan (i.e. filing fees, title
insurance, credit report, etc...). Input range: whole number
between 0 AND 99, 0!

Homeowner's insurance ($/yr): Coverage protecting the homeowner
from liability (damages to other people) and casualty (loss or
damage to the home or personal property). Input range: whole
number between 0 and 18,000.

Misc. yearly costs ($/yr): Expenses such as association fees,
yard maintenance, etc. Input range: whole number between 0
and 18,000.

Mortgage default insurance? Designed to protect a lender in case
of mortgage default. Generally required for FHA loans, and
usually for other loans secured with less than a 20% down
payment (default = yes).

Initial one-time fee ($): An up-front fee charged for issuing
the default insurance. Usually $0 for a FHA loan, varies for
other insurers. Input range: whole number between 0 and
99,000.

Premium added to loan (% of loan): This permits the borrower to
add the default insurance cost to the total loan cost.
Typically 3.8% for a FHA loan, varies to as high as 5% for
other loans. Input range: any number between 0 and 10.

Annual renewal (% of yr end balance): Instead of an amount added to
the loan, some insurers charge a yearly fee until the balance
to purchase price ratio is reduced to a specified amount (see
next data item). Input range: any number between 0 and 3%.

Annual renewals stop ... (% of price purchase): Balance to
purchase price ratio at which the annual renewal payments
cease. Usually this ratio is between 70 and 80 percent. Input
range: any number between 0 and 90 (default = 80 if Annual
Renewal > 0).

--- Tax Basis ---

Following is a list of Homebuying and Refinancing 2.0's tax information
data items with a description of each one:

IRS Filing Status: Choose the appropriate status (4 choices) as
filed with the IRS.

Number of exemptions (#): The number of exemptions as filed with
the IRS. Input range: whole number between 0 and 30.

Estimated yearly income ($/yr): Adjusted gross income as filed
with the IRS. Input range: whole number between 0 and
990,000.

Income escalation rate (%/yr): The estimated amount that income
will increase each year. Input range: Any number between 0
and 20.

Non-housing deductions ($/yr): Amount of non-housing itemized
deductions. Homebuying and Refinancing 2.0 will add to this
the yearly interest payments and will determine whether to use
a standard deduction instead of itemized deductions. For the
1989 IRS 1040 Form Schedule A the non-housing deductions would
be determined by subtracting lines 9 & 10 from line 26. Input
range: whole number between 0 and 990,000.

State income tax rate (%): Average state income tax rate.
Homebuying and Refinancing 2.0 calculates a savings in state
tax based on the state tax rate and the yearly interest
payments. Input range: any number between 0 and 30.

--- Time Value of Money ---

Following is a list of Homebuying and Refinancing 2.0's time value of
money data items with a description of each one:

Discount (or inflation) rate (%/yr): This is the inflation rate
which Homebuying and Refinancing 2.0 will apply over the life
of the loan. Homebuying and Refinancing 2.0 uses this value
to: 1) calculate a discounted after-tax cost of home
ownership, and 2) adjust the yearly ending balance of a Price
Level Adjusted Mortgage (if appropriate). Depending on
whether a user is optimistic or pessimistic a bout the future
of the economy, the average inflation rate over the next 30
years will probably be between 3 and 8 percent. Input
range: any number between 0 and 20 (default = 4.5%).

Discount rate's starting date (year): Base year for Homebuying and
Refinancing 2.0 to use in the discounted cost calculations.
Input range: whole number between 1950 and 2050 (default =
Year of First Payment).

Length of Homebuying analysis (yrs): The number of years that
Homebuying and Refinancing 2.0 will calculate total home
costs. This item should be set to the largest common length
of time of different loans to be compared. It is important to
remember that home costs continue (unfortunately) even after
the loan is paid off. It would be financially unfair to
compare two different loans if one is burdened with more non-
loan expenses than the other one (default = Length of Loan).

[5]
5) Homebuying Results

Homebuying and Refinancing 2.0 displays three different result screens:
1) The Cost Breakdown and Loan Approval Rating 2) Average Monthly Costs
per Year, and 3) Cumulative Costs at the End of Each Year. These
screens are described separately below.;

The Cost Breakdown & Qualification Rating screen includes the
following:

Expense Category: This column lists the types of costs associated
with buying a home and is useful for planning budgets.

Costs During First Year:
($/mon): The average monthly amount of payment for each
corresponding expense item. If an expense item
represents a one time charge (ie. down payment, points,
etc.) then its average cost is displayed as not
applicable (n/a).

($): The total amount of payments in the first year for each
corresponding expense item.

Costs Over Life of Loan:
(Total $): The total amount of payments over the life of the
loan for each corresponding expense item.

Qualification Criteria: Homebuying and Refinancing 2.0 displays
the ratio of monthly housing expenses to income and the
maximum amount of additional payments based on a recommended
ratio of total debt to income. These ratios and the amount of
down payment are the primary loan criteria used by lending
institutions to qualify homebuyers. Homebuying and
Refinancing 2.0 uses the following logic to display a
suggested loan approval rating:

The second result screen displays the Average Monthly Costs of
Homeownership per Year. This screen includes the following headings:

Payments:
Date (yr): Year for the corresponding loan and cost results.

Cum (#): Number of cumulative payments at the end of the
current year.

Interest Rate (%): Loan's interest rate at the end of the year.
NOTE: The interest rate is marked with an asterisk if it
changed during the year.

Loan payments:
Prin. ($/mon): Average monthly amount of principal paid on
the loan during the year.

Int. ($/mon): Average monthly amount of interest paid on the
loan during the year.

Total ($/mon): Average monthly amount of total payments
(interest plus principal) paid on the loan during the
year.

Balance:
Yr End ($): Balance of the loan at the end of the year.

Total Cost of Home:
Total ($/mon): Average monthly cost of the home during the
year. This includes the total loan payment, points (1st
yr only), property tax, and expenses. This column is
very useful in planning household budgets.

ATaxDed ($/mon): Average monthly cost of the home during the
year after tax savings are subtracted from the before tax
column. These tax savings are calculated by subtracting
the user's tax liability based on INcluding the housing
deductions from the user's tax liability based on
EXcluding the housing deductions.

19XX$ ($/mon): Average monthly after-tax cost of the home
during the year discounted at the user supplied inflation
rate. Each corresponding year's after-tax cost is
discounted to a specific year (19XX), default is the year
of purchase. This column shows what the after-tax cost
would be in today's dollar value. By today's dollar
value as the standard measure of cost, one can fairly
compare loans of differing lengths of time (i.e. 30 yr
vs. 15 yr, and prepayments). The danger of UNdiscounted
values to compare loans with shorter time durations is
that the cost savings are exaggerated due to the fact
money is always worth more today than tomorrow (as long
as we have inflation).

The third result screen displays column headings similar to the monthly
headings described above except the values are Cumulative as of the End
of the corresponding year. This screen is useful for comparing loans
which will not be held for their full length.

[6]
6) Comparing Renting versus Buying

Homebuying and Refinancing 2.0 comparison of the renting versus buying
will help a user decide if it makes financial sense to buy or rent.
For a given set of user defined conditions the program compares the
difference in cash flow (out of pocket costs) of buying versus renting,
the amount of asset appreciation the home will generate, and the
unrealized profit a user could expect to see yearly over the length of
the analysis period.

[7]
7) Entering Refinancing Data

Following is a list of the program's refinancing data items with a
description of each one:

Existing Mortgage Information
Balance (amount to refinance) ($): The amount of principle left on
the current loan.

Current interest rate (%/yr): The interest rate of the current
loan.

Remaining loan life (yrs): Amount of time, in years, left on the
current loan. NOTE: To assist a user in verifying their
input, the program calculates and displays the current amount
of monthly loan payment.

Closing costs ($): The amount of down payments EXcluding points.
The program calculates and displays refinancing results based
on a range of interest rates and points.

New Loan Data
Length of new loan (yrs): Number of years of the new refinanced
loan.

Related Data:
Tax Rate(%): Your top IRS tax rate category.

Inflation rate (%/yr): Inflation rate for the program to use in
order to discount the costs for a fair comparison between the
current and refinanced loans.

[8]
8) Refinancing Results

Homebuying and Refinancing 2.0 allows a user to determine how much a
refinanced mortgage will decrease monthly payments, save in total
present value after-tax dollars over the loan life, and how long it
will take to recoup the cost of refinancing. Although many rules of
thumb have been described for estimating these items, only Homebuying
and Refinancing 2.0 performs the necessary financial calculations
quickly and accurately. The program's present value after-tax analysis
is especially useful when the new mortgage will be for a longer or
shorter period of time than the remaining time on the current mortgage.
The program rigorously calculates all yearly costs for all new loan
scenarios and compares these values to the yearly costs for the current
mortgage.

[9]
9) Retail Version

Homebuying and Refinancing PRO is the retail version of the shareware
program you are now using. The primary difference between the two
versions is that Homebuying and Refinancing PRO displays professionally
prepared graphs of some of the programs key results. These graphs,
which require EGA or VGA to view, include the following:

Type of graph
1) Cost of home (total, after-tax, present value) line
2) Yearly income vs total homebuying costs line
3) Breakdown of loan payments bar
4) Breakdown of total home costs pie
5) Savings due to prepayments bar
6) Comparison of renting vs homebuying line

To order the retail version select the appropriate option from the main
menu to print an order form.

This concludes the User's Reference Guide.

[EOF]


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