Dec 162017
 
An very good loan analysis program.
File LOANSAV2.ZIP from The Programmer’s Corner in
Category Financial and Statistics
An very good loan analysis program.
File Name File Size Zip Size Zip Type
LOANS.DOC 31275 8724 deflated
LOANS.EXE 124128 40092 deflated
REGISTER.TXT 1460 463 deflated

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Contents of the LOANS.DOC file


Loan Saver Program User Manual


SHAREWARE:

This program is distributed as shareware. You may make copies of
the archived file and distribute them to your friends and neighbors.
All that we ask is that all program and text files be distributed
including the REGISTER.TXT file. If you find these programs useful and
wish to purchase the non-shareware versions you may do so by filling
out the registration form and sending the appropriate payment (check or
money order) to:
Simple Software Solutions
P.O. Box 1658
Lawrenceville, Georgia 30246

Please note that we continue to spend a great deal of time and effort
on this program. We are currently working with a licensed realtor on a
new, improved version of this program. Your registration would be a
great encouragement in this effort. Also, any suggestions for
improvement and comments will be greatly appreciated.

The following files should be included with the shareware package:

LOANS.DOC This file, the program documentation.
LOANS.EXE The LoanSaver program.

Introduction:

The Loan Saver program is written with the home buyer or mortgagee in
mind to:

1. Help the buyer obtain the best loan terms possible.

2. Help the buyer estimate the cash required to close on a real
estate purchase including financing.

3. Enable a mortgagee to look at existing loans and determine all
parameters concerning that loan.

4. Allow a mortgagee to find ways to save on interest payout by
prepaying on the principal in several different ways.

5. Enable a mortgagee to get the interest paid on a loan for any
given calendar year for tax purposes even if he/she has made
additional principal payments.

To accomplish all the above the LOANS program has fourteen calculation
options available from the main menu. The purpose of this manual is to
give a detailed explanation of each option available on the program. To
select any option at the main menu use the cursor arrow keys to move
the highlight bar to the desired option and press the Enter key. In
most cases a pop-up window will appear on the screen containing the
required input fields for that option. You simply type in the
appropriate values in the input fields and the result is displayed
immediately. Moving between input fields is accomplished by using the
cursor arrow keys or the Enter key. If you enter a value into an input
field and get to the end of that input field you will automatically go
to the next field. The options that concern amortization schedules
will clear the main menu screen and put the amortization achedule
headers on the screen. Any other departures from this mode of
operation will be described under the individual option heading.


Miscellaneous Calculations

Mortgage Qualifying Analysis:

Banks and mortgage companies have certain criteria for deciding
if an applicant for a loan is capable of making the payments.
This is based on their gross monthly income and the amount of
monthly debt payments they already have. Generally the monthly
loan payment cannot exceed a certain percentage of the applicants
gross salary less other debt payments. When you select this
option from the main menu a window will pop up on the screen with
input fields for gross monthly salary, monthly payments on
current debts, estimated real estate taxes and estimated
homeowners insurance payments. Two minimum payments are shown.
One uses the monthly payments on current debts and the other
doesn't. The percentages applied to the monthly income are
different for the two. When monthly payments on current debts
are included the percentage is 36 percent. When current debts
are excluded from the calculation 28 percent is used.

The result of this option will affect the Fixed Rate Mortgage
Payments and Adjustable Rate Mortgage Payments options. If the
maximum payments calculated from this option are less than what
is currently shown in the Mortgage Payments options, the amount
of the loan will be adjusted so that the payments will be equal
to or less than the maximum. Thus if you want to see how much
you can qualify to borrow set up the Mortgage Payments options
with very high loan amounts (with current interest rates and
desired term) and then select this option and calculate your
maximum monthly payments.

Estimated Closing Costs:

There are many ways to purchase and finance real estate but there
are some basic major categories that closing costs can fall
under. Closing costs are determined by adding the totals in
these six categories:

1. Down Payment
2. Financing Expenses
3. Prepaid Items
4. Escrow Items
5. Miscellaneous
6. Credits

Each of these categories has its own set of specific items. When
this option is chosen from the main menu a pop-up window opens
showing these six categories with totals and a total closing
cost. A highlight bar appears which can be moved with the cursor
arrow keys just like in the main menu. By moving the highlight
bar and pressing the Enter key you can choose an expense category
to change. When the Enter key is pressed another window pops up
listing all the cost items under the category with input fields
for you to input your particular expense item amounts. Running
totals are shown in each window. Pressing the Esc key closes the
current item window and takes you back to the category menu.
Also when you return to the category menu the category total and
total closing cost estimate is updated to reflect the new values
you have entered. Pressing the F1 key will cause the program to
print a full page closing cost estimate report with each cost
item individually listed under each category.

Closing cost items vary for any particular sales contract so some
of the items in this program will not be used and there may be
some that are not listed. Each item not used should have zeros
entered in the input field and items not listed should be placed
in the "Other" item on the detail windows. Some items are
estimated as a percentage of the purchase price or loan amount.
For these items you are given a choice of entering a percentage
and letting the program calculate the actual dollar amount or
entering the actual dollar amount directly and letting the
program calculate the percentage. A good example of this type of
item is the loan closing costs listed under the Financing
Expenses category. These costs are sometimes estimated as a
percentage of the loan amount or they may be just a flat
attorney's fee. You have the option of entering the percentage
or the exact amount of the attorney's fee.

Points vs Interest Rates:

It is sometimes desirable to pay what is called discount points
on a mortgage to reduce the interest rate. What this amounts to
is an up front payment of a percentage of the loan (sort of like
prepaid interest) which the mortgage lender requests for reducing
or "discounting" the annual percentage rate it charges for the
loan. Any lender can give you several different combinations of
interest rates and discount points it is willing to base its
loans on. This option allows you to compare the total points
plus interest for the life of a fixed rate loan.

When this option is selected from the main menu a window pops up
on the screen showing the total loan amount and term of the loan.
Then it also shows points, interest, totals and monthly payments
for two separate fixed rate loans. You may change the points and
interest rates for both loans and see which of the two is cheaper
over the entire life of the loan.


Adjustable Rate Mortgage Payments:

Adjustable rate mortgages, often referred to as ARM's,
generally have a starting percentage rate which is used to
calculate the first years monthly payments. There is a maximum
yearly increase in interest percent (usually around two percent)
and a lifetime cap on the interest rate. This option takes the
loan amount, beginning interest rate, maximum yearly increase,
the lifetime cap percentage and the loan term and calculates the
first year monthly payments, the second year monthly payments
(assuming an increase equal to the maximum yearly increase) and
the largest monthly payments (the cap). When this option is
chosen from the main menu a field input window that works the
same way as the fixed rate payments window will pop up. No
printout is available from this option.

ARM Amortization Schedule:

This option takes the information from the ARM Payment option and
calculates an amortization schedule of payments for the life of
the loan. Each payment is broken down to show the amount of
interest and principal paid by each payment, the cumulative
interest and the outstanding balance on the loan. This option
begins with the first year interest rate and increases the
interest rate by the maximum yearly increase each year until it
reaches the interest rate cap. The rest of the loan is amortized
at the cap interest rate. You are allowed to change the interest
rate and/or the monthly payment each year. Thus you can enter
the actual interest rate for each year and have the program
refigure the schedule.

When this option is chosen from the main menu the amortization
schedule screen is displayed. If the ARM payment option has not
been run yet the ARM payment calculation window will pop up
allowing you to make modifications if you wish. When you exit
this window the schedule is calculated and the first year is
displayed on the screen. You may move through the schedule one
year at a time by hitting the PgUp and PgDn keys (hitting the
PgUp key while the first year is displayed will cause the last
year of the schedule to be displayed). You may change the
current interest rate for the year being displayed by simply
typing over the interest rate displayed. The monthly payment
will be recalculated for the year and the entire amortization
schedule will be revised to reflect the new rate for that year.
You may also cursor over to the payment and change that if you
wish. Some adjustable rate mortgages will adjust the interest
every year but adjust the monthly payment only every five years
or somthing like that. You can simulate this by adjusting the
interest rate for the year and then changing the monthly payment
back to what it was before. You may get a printout of the
schedule by hitting the F1 key. Hitting Esc will return you to
the main menu.

Interest Paid in Tax Year:

This option displays your amortization schedule on a calendar
year basis showing the total interest paid for the calendar year.
You may page through the years using the PgUp and PgDn keys. A
printout of the entire amortization schedule showing the interest
paid each year is available by hitting the F1 key.

When this option is chosen from the main menu the amortization
schedule screen is displayed. If no amortization schedule has
been calculated a fixed rate amortization schedule will be
calculated. A small window will open on the screen asking for
the date the first payment was made. This is the first periodic
payment date, NOT the closing date on the loan. The printout
shows the exact date for each payment and prints the total
interest for the year after each December payment. The display
shows one calendar year at a time but does not show dates.

As mentioned above, the fixed rate amortization schedule will be
calculated at the start of this option if no amortization
schedule has been calculated yet. If any schedule has been
calculated no additional calculation is made. This has the
advantage of letting you print any schedule that has been
calculated including modified schedules. This enables you to

look at your tax deductions after your schedule has been
modified.


Fixed Rate Loan Calculations

Fixed Rate Mortgage Payments:

Mortgage payments can be calculated if you know the total loan
amount, periodic interest rate and term of the loan. This option
does this calculation. Interest rate is input on a yearly basis
which is usually how it is quoted. The term of the loan is in
years also. The periodic interest and term are converted to
months and the standard formula:

Payment = TotalLoan * i / (1 - (1 + i)^(-n))

Where i is the periodic interest (for a month) expressed as a
decimal ( 10% = .1 ) and n is the total number of payments (term)
on the loan. When this option is chosen from the main menu a
field input window pops up on the screen allowing input of total
amount of loan, yearly interest and term of loan in years. The
monthly payment is shown in the window and is automatically
updated each time an input field is changed. No printout is
available from this option.

Number of Payments for Loan:

Sometimes you may remember how much you borrowed, the interest
rate and the amount of the monthly payments but forget what
the term of the loan is. This option will calculate it for you.
This option uses another standard formula for finding the term:

n = -ln(1 - TotalLoan * (i / Payment)) / ln(1 + i)

Where n is the term and i is the periodic interest rate. The
ln( ) notations represent the natural logarithms of the result of
the expressions in side the parenthesis. Because of this you may
encounter certain combinations of parameters that will not be
accepted in the field input window. If this happens recheck what
is on the screen. What has happened is that one of the
expressions inside the ln parenthesis evaluates to a negative
value (you cannot take the logarithm of a value less than zero).
Usually you can get around this problem by inputting the values
in a different order.

Choosing this option from the main menu will cause a field input
window to pop up on the screen. No printout is available of this
option.

Balance after Kth Payment:

This option lets you find out how much you still owe on the loan
after K payments without having to calculate an entire
amortization schedule and look up payment number K. The
remaining balance is calculated using another standard formula:

Balance = Payment * ((1 - (1 + i)^(K - n)) / i

Where i is the periodic interest rate, n is the total number of
payments (term) and Payment is the amount of each payment. Note
that K must be less than n.

When you choose this option from the main menu a field input
window pops up allowing you to input the values for the
calculation. The balance is displayed on the screen and updated
each time you change an input value. No printout is available
for this option.

Loan Amount from Payment, Interest and Term:

Perhaps you are making payments on a loan and you know the
interest rate, payment amount and term but you have forgotten the
total amount of the loan. This option will find the total amount
of the loan for you. The formula used in this option is the same
one used to calculate the fixed rate payments resolved for
finding the loan amount instead of the payment.

When this option is chosen from the main menu a field input
window pops up allowing you to enter the values for payment,
interest and term. The loan amount is updated each time you
change one of the input items. No printout is available for this
option.

Amortization Schedule:

This option will take the result of the Fixed Rate Mortgage
Payment option and calculate an amortization schedule for the
entire life of the loan. Included in this schedule is a
breakdown of each payment showing how much of it is interest and
how much is paying the principal, a running total of the interest
paid on the loan and the amount of the principal remaining after
each payment.

When this option is chosen from the main menu the amortization
schedule screen is displayed. If the monthly payment option has
not been run yet the monthly payment calculation window will pop
up allowing you to make modifications if you wish. When you exit
this window the schedule is calculated and the first year is
displayed on the screen. You may move through the schedule one
year at a time by hitting the PgUp and PgDn keys (hitting the
PgUp key while the first year is displayed will cause the last
year of the schedule to be displayed). You may get a printout of
the schedule by hitting the F1 key. Hitting Esc will return you
to the main menu.


Amortization Modifications

There are a number of ways to save interest by paying extra on your
loans principal. These amortization modifications are a few ways to do
this in a relatively painless manner. If you elect to pay extra on
your principal be sure you talk to your lender first. Many loan
companies, when they receive a payment over the normal amount, will put
the extra into the escrow account (to pay taxes and insurance) unless
you specifically designate that the extra is to go to pay on the
principal. Be sure you and your lender agree that the extra will go to
your loan and not escrow before you send in your payment.

Accelerated Payment Schedule:

This option recalculates your amortization schedule based on
prepaying one year of principal payments each month for a
designated number of months at the beginning of the loan. Since
the principal paid per payments is very small at the beginning of
the payment schedule (you pay mostly interest at first) it does
not add a lot to the payment to pay several months principal at
first. This has the effect of reducing the term of the loan. If
you make your payment equal to the regular payment amount plus
the next twelve months principal payments you have reduced the
term of the loan by one year in one month!

When this option is chosen from the main menu the amortization
schedule screen appears. If the straight amortization schedule
has not been run the payment window will pop up. If all is ok
you can just hit the Escape key. A window will then pop up
asking how many years you wish to remove from your loan. The
modified amortization schedule will be calculated by adding
thirteen months principal plus the appropriate interest each
month for the number of months corresponding to the number of
years you wish to eliminate from the schedule. The screen
display will show you how much interest you will save by doing
this. You may print the resultant amortization schedule by
hitting the F1 key. Note: This option will not work with ARM
loans since you cannot reduce the term of an ARM loan by paying
extra on the principal.

Modify Individual Payments:

Suppose you receive a bonus from your company and want to use it
to pay an extra amount of principal on your mortgage. This
option will allow you to go through the entire amortization
schedule and modify any payment(s) you wish. The amount of
savings you will realize will be instantly displayed on the
screen. You can even make changes to individual payments on a
schedule that has been modified by one of the other methods in
this program!

When this option is chosen from the main menu the amortization
schedule screen appears with the current schedule displayed. The
cursor will appear at the first payment. If no schedule has been
calculated yet the payment calculation window will pop up first
giving you a chance to change any of the parameters before the
schedule is calculated. You may move the cursor to any payment
on the screen using the up and down arrow keys. When you get to
a particular payment you wish to change simply type in the new
amount and the amortization schedule will be recalculated and the
savings will be shown at the top of the screen in the header
information. You can use the PgUp and PgDn keys to display
the previous or next twelve month listing. When you are all done
you can print the entire schedule by hitting the F1 key. Note:
This option will work with either fixed rate or ARM loans.

Bi-Weekly Schedule (13 payments per year):

A popular method of saving interest on a mortgage is to pay half
a months payment at a time on a biweekly schedule. There are
many companies who specialize in setting you up with this type
schedule. This is great for people who are paid every two weeks
or every week instead of getting a monthly paycheck. The trick
is that there are 26 weeks in a year instead of 24 (twice twelve
months). So if you make biweekly payments you effectively make
thirteen payments a year instead of twelve. The thirteenth
payment pays off extra principal. The problem with this method
is that the loan company won't accept biweekly payments. It
still insists that it get that first of the month monthly
payment. Thus to work this system requires that you hold the
biweekly payments until a regular monthly payment is due.
Generally what the mortgage saver companies do is collect your
biweekly payments and put them into an escrow account from which
they pay your monthly payment to the original mortgage company.
When you have enough to make an extra payment (once a year) they
make a double payment to the mortgage company. For this service
they collect a fee. You can do exactly the same thing by
setting up your own bank account and paying into it on a biweekly
schedule. At the first of the month you take the amount of one
monthly payment and send it to the mortgage company. When your
account has an extra months payment in it you make a double
payment. This option will estimate the amount of interest you
will save by doing this.

When this option is chosen from the main menu the amortization
schedule screen appears. The payment calculation window will pop
up on the screen. A straight amortization schedule is calculated
before this option works. Thus if you run this option it will
wipe out any other saving option that may have been run
previously. The schedule is displayed and the savings is
displayed in the header information at the top of the screen.
Hitting F1 will print the schedule. Note that the biweekly
payment amount is displayed in the header information instead of
the monthly payment amount but the schedule is still monthly so
it shows the monthly payment amount. The schedule simply makes a
double payment every twelfth month. This schedule is the one the
mortgage company sees. This is a simple method of simulating the
effect of biweekly payments. Note: This option will not work
with ARM loans.

Increase Fixed Payments:

Monthly payments often do not come out in even dollars. Ever
wonder what you might save if you rounded up each monthly payment
to say the next hundred? That is what this option will give you.
For example, suppose your monthly payment comes out to be $742.24
and you feel you could just as easily pay $800 even per month.
You can estimate how much that increased payment will save you in
interest charges. One caution: Mortgage companies are not crazy
about getting payments that are only a few cents or dollars over
the scheduled payment. Some require that increased payments be
at least a minimum amount over the scheduled payment (like $100
or $200). Check with your mortgage company before trying this
one.

When this option is chosen from the main menu the amortization
schedule screen appears. The payment window will pop up giving
you a chance to change any of the parameters for the loan. Once
you Escape out of that window another window pops up asking for
the new monthly payment (must be larger than the normal payment)
and the first and last payment number you will make this
increased payment. Thus if you want to make increased payments
for only a year or two you can do this. Hitting Esc in this
window will pop off the window and calculate and display the new
amortization schedule. You can use the PgUp and PgDn keys to go
back and forward through the schedule and hitting the F1 key
will print the entire schedule. Note: This option will not work
with ARM loans.

Pay Extra into Savings for Payoff:

Perhaps you are a little wary of paying extra to the mortgage
company and would rather have control of the money. You could
pay into a savings account until the savings account balance
equalled the outstanding balance of the loan, then use the
savings to pay off the loan early. This option will calculate
this and show you when your savings will pay off your loan and,
of course, tell you how much money you will save.

When this option is chosen from the main menu the amortization
schedule screen appears. The payment window will pop up giving
you a chance to change any of the parameters for the loan. Once
you Escape out of that window another window pops up asking for
the amount you want to deposit monthly into the savings account
and the interest percentage that will be paid on the saving
account. When you finish putting in this information hitting Esc
will pop off that window and the program will calculate the
schedule and display it on the screen. You may use PgUp and PgDn
to go back and forward through the schedule. Hitting the F1 key
will print the entire schedule. Note: This option will work
with either fixed rate or adjustable rate loans.

Disclaimer and Warranty

The author of this program makes no claims as to the accuracy or
validity of this program under any specific situation. The LOANS
program is written to be used for estimates only. The program disk is
warranted to be free of physical defects. Simple Software Solutions
will replace any damaged or defective disk. To get a damaged or
defective program disk replaced return the original disk to Simple
Software Solutions, P.O. Box 1658, Lawrenceville, Georgia 30246.
Be sure to include your return address.




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