MORTGAGE QUALIFIER PLUS PX2 ® MORTGAGE FINANCE CALCULATOR Model 3442 Desktop Model 43442 User’s Guide
Introducing the MORTGAGE QUALIFIER PLUS® PX2 Mortgage Finance Calculator The MORTGAGE QUALIFIER PLUS PX2 was custom-designed for mortgage lenders and residential real estate pros.
TABLE OF CONTENTS GETTING STARTED..........................................................................1 KEY DEFINITIONS .........................................................................1 Basic Operation Keys ....................................................................1 Mortgage Loan (TVM) Keys ..........................................................2 Tax Savings Keys ..........................................................................5 Rent vs. Buy Keys .........................
Finding Loan-to-Value (LTV) Based on Down Payment and Sales Price ................................................................................29 Entering Loan-to-Value (LTV) and Finding Loan and Down Payment ..........................................................................29 Taxes and Insurance ...................................................................30 Setting Tax and Insurance % Rates ............................................30 Recalling Tax and Insurance % Rates.................
BUYER QUALIFYING...................................................................52 QUALIFYING EXAMPLES ...........................................................53 Recalling Income/Debt Qualifying Ratios ....................................53 Storing New Income/Debt Qualifying Ratios ...............................54 Finding Qualifying Loan Amount and Sales Price (Simple Example Excluding Tax/Insurance) ..............................
GETTING STARTED KEY DEFINITIONS Basic Operation Keys O Turns all power off. The memory and most financial registers are cleared. o If off, turns power on. If on, a single press clears the last entry while a second press in succession clears all non-permanent registers.* *Clears Loan Amount, Payment, Price, Down Payment, Income, Debt, Expense, and Mortgage Insurance/MI (unless MI is set to hold; see Preference Settings). +–x ÷= Arithmetic operation keys. 0–9 Digits used for keying in numbers.
sx Clear All — Clears all entered values and returns all storable values to the default settings. Use this only with caution, as it will reset ratios, payments per year, etc. back to their defaults (see the Appendix for a list of these settings). Note: Clear All will not affect any changes made to Preference Settings. s= Preferences (Prefs) — Activates the Preference Mode, where you can select custom settings (see Preference Settings).
value of a financial problem. s+ Investment Future Value — Functions the same as Future Value, but compounds interest at the beginning of the period rather than the end. P Sales Price — Enters or calculates Sales Price based on the entries of Loan Amount (or equivalent mortgage components) and Down Payment. d Down Payment — Enters (in either percent or dollars) or calculates Down Payment, based on the entries of Loan Amount (or equivalent mortgage components) and Sales Price.
interest-only payment. This is also calculated via the fourth press of the p key. s÷ Payments per Year (Pmt/Yr) — Used to set the number of payment periods per year. Default value is 12, for monthly. Note: You can store the number of payments per year permanently or semi-permanently. See “Preference Settings”. a Amortization (Amort) — Finds total interest, principal, remaining balance, remaining term, and estimated mortgage interest tax deduction.
est, or simple interest accumulated (based on a 360-day year) during the days before the first loan payment is made using the interest rate stored in the Interest register. sT Equity Builder — Converts a regular monthly loan to an Equity Builder loan, where the buyer may realize significant interest savings. After loan variables are entered, pressing s T displays the reduction in term.
Rent vs. Buy Keys sP Rent vs. Buy — Calculates a comparable sales price, loan amount and mortgage payment (versus the cost of monthly rent). You must enter loan variables and a tax bracket via s p, then enter the prospective buyer’s current rent and press s P. Consecutive presses of P will calculate the comparable sales price, loan amount, monthly loan payment (including tax/insurance, if entered) and estimated annual/monthly income tax savings, and tax bracket.
(Cont’d) INCOME RATIO = TOTAL HOUSING EXPENSE GROSS MONTHLY INCOME DEBT RATIO = TOTAL HOUSING EXPENSE + MO. DEBT GROSS MONTHLY INCOME Note: Typically, when figuring government loans (FHA/VA), these formulas also include estimated expenses for maintenance and utilities (added to the Total Housing Expense for both ratios). Also, real estate financing and qualifying varies per region and by lender, who of course, take other factors into consideration, such as a buyer’s credit and employment history.
(Cont’d) *The Maximum Qualifying Loan Amount displayed is the “restricted” loan amount that the buyer may qualify for. This loan amount is based on whichever of the two ratios, income or debt, limits the buyer the most. If the buyer’s maximum qualifying loan amount is restricted by their debt, then the unrestricted qualifying loan amount will also be displayed. The unrestricted qualifying loan amount is based purely on the buyer’s income and is not restricted by their debt.
Tax, Insurance and Expense Keys In addition to Qualifying, the following keys are also involved in PITI and Total Payment calculations (e.g., they are added to the monthly payment): s7 Property Tax (Tax) — Used for calculating the PITI payment and for Qualifying. Stores estimated annual property tax in either percent or dollar amount. If entered as an annual dollar amount, a press of ® and 7 converts to the monthly tax amount, and pressing ® 7 again converts to the annual percentage rate.
(Cont’d) Note: Entering a number equal to or less than 10 is assumed to be an annual percentage. Mortgage insurance is calculated from the loan amount. Note: Tax and Insurance entered as dollar amounts will remain fixed, even if sales price or loan amount is changed. However, if entered as a percentage of sales price or loan amount, these items will automatically be re-calculated if sales price or loan amount is changed. sD Expense (Exp) — For Total Payment and Qualifying.
sß Pick-A-Payment Term — Enters the P-A-P/EB P-A-P term that is independent of the Standard T entry for fixed-rate loans. s6 Annual Payment Cap % (Pmt Cap%) — Stores the annual percent cap for the P-A-P/EB P-A-P annual payment adjustment, which is applied for the selected Recast period. (Default: 7.5%) When the Recast period is achieved, then the comparison between the new payment (made for each year) and the Cap Payment is no longer applied.
(Cont’d) The typical output of this key is as follows: Press Calculation 1-5 6 7 8 9 10 11 12 13 P-A-P Payments (Years 1-5)* Range for P-A-P Savings and ROI% Savings Range** P-A-P Savings (vs. fixed-rate loan or P-A-P Note% Stored ROI% (Default 10%) ROI% Savings (based on default of 10%, or input of ROI%) Range of P-A-P Amortization P-A-P Total Principal and Interest P-A-P Total Interest Paid P-A-P Loan Balance at End of Range *Unless “1.
(Cont’d) calculate the P-A-P Savings and ROI for the first two years. Calculating the P-A-P (or EB P-A-P) with an entered number greater than five years will still calculate the P-A-P Savings and ROI for years 1-5; however, the P-A-P loan will be amortized based upon the range entered (i.e., 7 ∏ will calculate P-A-P Savings and Investment Savings w/ROI for years 1-5, and the Amortized values will be calculated for years 1-7).
! 1st TD Interest:Term — Stores the annual interest and term for the fixed-rate 1st TD. These values are used when calculating the 1st:2nd fixed Combo Loan. Entry is made using the : key (separating interest and term). Both interest and term values are required for a valid entry. Values will be retained until changed or reset. s! 2nd TD Interest:Term — Stores the annual interest and term for the fixed-rate 2nd TD.
s4 Interest-Only 2nd Trust Deed Combo — Operates similarly to the Fixed-Rate Combo Loan function, but for a combo loan where the 2nd Trust Deed is Interest-Only (the 1st Trust Deed is a standard fixedrate P&I loan). sB Interest-Only 2nd Trust Deed Combo (Desktop model 43442 Only) — See previous definition for s 4. Pick-A-Payment and Equity Builder Pick-A-Payment Combo Loan Keys This calculator also has the capability of using a P-A-P or EB P-A-P loan as the 1st Note in a Combo Loan.
BASIC ARITHMETIC EXAMPLES Arithmetic This calculator uses standard chaining logic, which simply means that you enter your first value, the operator (+, –, x, ÷), the second value and then the equals sign (=). A. B. C. D. 3 3 3 3 + – x ÷ 2 2 2 2 = = = = 5.00 1.00 6.00 1.50 Percentage Calculations The Percent % key can be used for finding a given percent of a number or for working add-on, discount or division percentage calculations. A. B. C. D.
Reduction in Listing Price (Discount %) A nervous seller has had her property on the market for just over four months listed at $175,500. Because she is anxious to move into a new home, she wishes to reduce the listing price by 5%. Calculate both the amount of reduction in dollars and the new, lowered listing price. STEPS KEYSTROKES Clear calculator Enter sales price Subtract 5% Find new listing price oo 175500 –5% = DISPLAY 0.00 175,500. 8,775.00 166,725.
Preference Settings Your calculator has a Preference Mode, which allows you to program the calculator to various settings. For example, it lets you store certain values permanently, display certain values, or show values in a specific order. To access the Preference Mode, press s, then =, then keep pressing = to toggle through the settings listed below. Press the + key to advance through the sub-settings. Use the – key to back up within the sub-settings.
(Cont’d) After s, Keep Description Pressing (Press + to Advance =: Display within each category, – to Back up): at O. 4 Property Tax/Insurance (T/I) - Clr OFF TAX INS — Clears all Tax/Ins (% and $) values - Hold Pct. TAX INS — Holds only Tax/Ins percent (%) entries at O. - Hold All TAX INS — Holds all Tax/Ins (% and $) values at O. - Clr Clr TAX INS — 5 6 Mortgage Insurance (MI) - Clr-Clr M INS — Clears mortgage insurance (% and $) upon o o.
(Cont’d) After s, Keep Description Pressing (Press + to Advance =: Display within each category, – to Back up): 8 Beginning or End Mode - TYP END — - TYP BEG — 9 End Mode (Default) Beginning Mode P-A-P/EB P-A-P Payment Cutoff - YRS 5.00 P-A-P PMT — Shows the first five payments only. (Default) - YRS 1.00 P-A-P PMT — Shows the first payment only. - YRS nonE P-A-P PMT — Does not show any payments. - YRS ALL P-A-P PMT — Shows all adjusted payments.
(Cont’d) After s, Keep Pressing =: Display 13 - 12 M Recast 5 — 14 15 - 36 M Recast 5 — - ALT Recast 5 — Description (Press + to Advance within each category, – to Back up): Uses 5-year recast for a 12-Mo. P-A-P. (Default) Subsequent presses of + advance until year 15, then numbering starts over at one. Uses 5-year recast for a 36-Mo. P-A-P. (Default) Subsequent presses of + advance until year 15, then numbering starts over at three. Uses 5-year recast for all other P-A-P loans.
(Cont’d) Examples: STEPS KEYSTROKES Enter into memory Enter into memory Recall total in memory Subtract from memory Recall total in memory Replace memory Recall and clear 355µ 255µ ®µ 745sµ ®µ 50s®µ ®® DISPLAY M 355.00 M 255.00 M 610.00 M 745.00 M -135.00 M 50.00 50.00 Memory Storage Keys (M0-M5) In addition to the standard cumulative Memory (as described above), your calculator has six independent Storage Registers—(M0) through (M5)—that can be used to permanently store single, noncumulative values.
Additional Memory Storage Keys (M10-M19) In addition to M0-M5 (as described previously), your calculator has ten additional independent Storage Registers — (M10) through (M19) — that can also be used to permanently store single, noncumulative values. To access these storage registers, use the following keystrokes: s ® • (#), with (#) being digits 0 – 9. Examples: Store 250 into M10 and recall the value: KEYSTROKES 250s®•0 Oo ®•0 DISPLAY M-10 250.00 0.00 M-10 250.
(Cont’d) 6. It is good practice to press o twice after completing a financial problem to ensure that you have cleared the previous l and p registers. 7. When solving for a financial component, the calculator may display the word “run” in the display. Solving for interest may take several seconds (up to 15) while the word “run” displays. 8.
Finding the Interest-Only Payment Find the interest-only payment on a loan of $15,000 at 9% interest. STEPS KEYSTROKES Clear calculator Enter loan amount Enter interest Find interest-only payment oo 15)l 9ˆ s π* DISPLAY 0.00 15,000.00 9.00 112.50 *The fourth press of the p key also calculates the interest-only payment if you have a Term entered, but you may use the above keystrokes as a shortcut.
Finding the Interest Rate Find the interest rate on a mortgage where the loan amount is $98,500, term is 30 years, and the payment is $1,150 a month. STEPS KEYSTROKES Clear calculator Enter loan amount Enter term Enter monthly payment Find annual interest Find periodic interest oo 98500l 30T 1150p ˆ ˆ DISPLAY 0.00 98,500.00 30.00 1,150.00 “run” 13.78 1.15 Finding the Loan Amount Approximately how much could you borrow if the interest rate was 7.
Non-Monthly Loans Most residential real estate loans are paid off monthly. However, if you have a non-monthly loan, you must change the number of payments per year by entering in the number of payments per year and pressing s ÷. For example, here’s how to set your calculator to four payments per year. STEPS KEYSTROKES Clear calculator Enter # of payments/year oo 4s÷ DISPLAY 0.00 4.
Sales Price/Down Payment One of the unique features of this calculator is its ability to work with not only Loan Amount, but with Sales Price and Down Payment. You can enter two values to find the third (e.g., enter Price and Down Payment to find Loan Amount). You can also enter the down payment in both percent or dollar format. For example, to enter a percent, say 20%, enter 20 directly into the d key. Or enter $20,000 (e.g., 2 0 ) d).
Finding Loan-to-Value (LTV) Based on Down Payment and Sales Price Find the loan-to-value if a buyer is putting $15,000 down on a $165,500 home. Then find the loan amount. STEPS KEYSTROKES DISPLAY Clear calculator Enter sales price Enter down payment $ Find down payment % Find LTV Find loan amount oo 165500P 15)d d d l 0.00 165,500.00 15,000.00 9.06 90.94 150,500.
Taxes and Insurance This calculator has keys that store your estimated local annual Property Tax, Property Insurance, and Mortgage Insurance (if applicable). This allows you to calculate the PITI (Principal, Interest, Tax, and Insurance) payment, in addition to the regular P&I payment. You may also enter monthly expenses, such as homeowner’s association dues—these are included in the calculation of the total payment (PITI plus expenses).
Recalling Tax and Insurance % Rates Recall your stored rates: STEPS KEYSTROKES Recall tax rate Recall insurance rate Recall mortgage ins. rate ®7 ®8 ®9 DISPLAY 1.50 0.25 0.50 Note: To change these values, simply enter new ones. Or, turn the calculator off then on, and the values will be cleared, unless they are programmed to hold under Preference Settings.
(Cont’d) STEPS KEYSTROKES Enter interest Find loan amount Recall property tax % Calculate property tax $ Recall property ins. % Calculate property ins. $ Recall mortgage ins. % Calculate mortgage ins. $ Find P&I payment Find PITI payment 8ˆ l ®7 ®7 ®8 ®8 ®9 ®9 p p DISPLAY 8.00 225,000.00 1.50 3,750.00 0.25 625.00 0.50 1,125.00 1,650.97 2,109.30 Note: The same procedure can be performed to find the opposite — that is, to find the % rates based on entered annual dollar amounts or insurance premiums.
PITI Payment (Tax and Insurance Entered as $) Find the PITI payment on a 30-year, 7.25% loan if the home’s selling price is $311,000 and the down payment is 20%. Local annual property taxes are estimated at $5,900 and property insurance at $370. Note: MI or mortgage insurance is not included in this case, as the down payment is 20%.
(Cont’d) STEPS KEYSTROKES Enter property insurance Enter mortgage insurance Enter monthly expenses Find loan amount Find P&I payment Find PITI payment Find total payment (PITI plus mo. expenses) Find interest-only payment 500s8 1200s9 150sD l p p DISPLAY 500.00 1,200.00 150.00 280,500.00 “run” 1,681.74 2,315.07 p p 2,465.07 1,402.
If the above loan starts in July, find the “after-tax” payment. STEPS KEYSTROKES Set Mo. 1 Offset to July Find annual tax savings Find monthly tax savings Find “after-tax” payment Return Mo. Offset to Jan. Return tax bracket to 21% 7s) spp p p 1s) 21sp DISPLAY 7.00 1,887.16 314.53 931.95 1.00 21.00 Rent vs.
APR and Total Finance Charges Calculating the Annual Percentage Rate (APR) and Total Finance Charges (TFC) is performed in two steps: (1) you set up the loan just like any other problem (that is, enter three known variables and solve for the fourth) and (2) combine points and fees and press s ˆ (APR) to solve APR.
Finding APR, Total Finance Charges (Including Mortgage Insurance) You are financing a mortgage of $275,000 for 30 years at a nominal, or quoted, rate of 6.25% interest. The cost of getting the loan is quoted as 1.5 points plus $550 in fees. What is the APR including mortgage insurance, total finance charges, principal amount financed, total cost, P&I payment, mortgage insurance, and PIMI payment? Mortgage insurance is estimated at 0.65% of the loan amount.
Date Examples Using the : key, you can quickly solve common real estate date problems: escrow or closing dates, listing expiration dates, and the number of days prepaid interest, etc. You enter a date as follows: Numerical Month :, Numerical Day : and two-digit Numerical Year.
Now, without clearing the calculator, add the pre-paid interest to the loan’s points and fees if they are equal to 1.5% and $500, respectively. Then find the Annual Percentage Rate (APR), based on these closing costs. STEPS Store the pre-paid interest in memory Find Loan Costs: Recall loan amount Find point cost Add fees Add prepaid interest stored in memory Find APR for this loan Clear All KEYSTROKES µ ®l x1•5%= +500= +®µ= sˆ sx DISPLAY M 252.08 M 100,000.00 M 1,500.00 M 2,000.00 M 2,252.08 M “run” 8.
Equity Builder Term Reduction and Payment Find the monthly P&I payment on a 30-year, $212,500 mortgage at 7.85% annual interest. Then convert it to an Equity Builder and find out how many years it will take to pay off this loan, the total interest savings, the return-on-investment (ROI%), and Equity Builder P&I payment.
Amortization and Remaining Balance The amortization function is quick and simple. It allows you to find total interest, principal and remaining balance for an entire loan, for an individual payment or individual year, or any range of payments or range of years, for fully or partially amortized loans. Notes on Amortization 1.
(Cont’d) 7. A useful new feature is that your calculator will also display an estimated Mortgage Interest Tax Deduction at the end of the amortization value list (after remaining balance is displayed), if a tax bracket is also entered via s p (Tax Brkt%). Note: If a tax bracket % is not entered, the calculator will use the default tax bracket of 21%, displayed upon ® s p. 8.
Amortization List for Individual Year(s) — Using “Next” Feature How much total interest and total principal will you pay on a 30-year, $90,000 loan at 8% interest during the first year? The second year? Third year, etc.? First, find monthly payment to “set-up” this loan. The calculator will automatically advance to the next year upon subsequent presses of a. Note: The mortgage interest tax deduction is based on the default tax bracket of 21% unless you have changed it via s p.
Amortization List for Individual Year(s) — Using Month Offset The first payment of a loan begins in May. Using the same loan amounts as the previous example, how much total interest and total principal will you pay on a 30-year, $90,000 loan at 8% interest during the first year? Note: The mortgage interest tax deduction is based on the default tax bracket of 21%, unless you have changed it via s p. The calculator will automatically advance to the next year upon subsequent presses of a.
Amortization List for Individual Payment(s) For a $175,000 loan at 6.85% interest for 30 years, find out how much interest and how much principal you’ll pay in the first and second payments. STEPS KEYSTROKES Clear calculator oo Enter loan amount 175)l Enter interest 6•85ˆ Enter term 30T Find monthly payment p Enter Pmt #1 1πa Find interest in Pmt #1 a Find principal in Pmt #1 a Find prin./int. in Pmt #1 a Find rem. bal. in Pmt #1 a Find rem.
Amortization List for a Range of Payments or Years For a $225,000, 30-year loan at 7.4% interest, find out how much interest and principal you’ll pay in payments 1-9 and years 1-10.
Mortgage Interest Tax Savings — 21% or 30% Tax Bracket What is the mortgage interest tax savings for the first year (if loan starts in January*) on a $310,000, 30-year loan at 7.25% interest? Base it on 21% tax bracket (default). Then, recalculate based on a 30% tax bracket. STEPS KEYSTROKES DISPLAY Clear calculator oo 0.00 Enter the loan amount 310)l 310,000.00 Enter interest 7•25ˆ 7.25 Enter term 30T 30.00 Find monthly payment p “run” 2,114.75 Enter Yr. 1 1a “run” 1-12 Find total interest in Yr.
Future Value Given any four components to a problem that includes a future value, you can calculate the fifth. Appreciation You purchased a home for $350,000 and want to know what it will be worth in 3 years, figuring an inflation or appreciation rate of 6%. (Set periods to one per year.) STEPS KEYSTROKES Clear calculator Set to 1 pmt/yr Enter present value Enter term in years Enter appreciation rate Find future value Return to 12 pmts/yr oo 1s÷ 350)l 3T 6ˆ sl 12s÷ DISPLAY 0.00 1.00 350,000.00 3.00 6.
Retirement Annuity What is the future value of an intial deposit of $87,000 after 15 years, if an additional $250 is deposited monthly, the interest rate is 5%, compounded at the beginning of each month? STEPS KEYSTROKES Clear calculator Enter present value Enter payment Enter term Enter interest rate Find the Investment FV oo 87)l 2 5 0 p* 15T 5I s+ DISPLAY 0.00 87,000.00 250.00 15.00 5.00 250,992.90 Note: If calculating annual lump-sum payments, you must set your payment per year to one (e.g.
Trust Deeds and Discounted Notes Your calculator easily handles trust deed purchase price and yield problems. Two things to remember are: (1) when entering or solving for “yield” or “rate of return,” use the ˆ key, and (2) when entering or solving for “purchase price” or “present value,” use the l key.
What should you pay for this trust deed if you want an 18% yield on your investment? STEPS KEYSTROKES Enter your desired yield Find purchase price 18ˆ l DISPLAY 18.00 “run” 5,530.99 Finding the Value and Discount of a Trust Deed Determine the value and discount required for a $75,000 mortgage, payable at $937.50 per month, bearing interest at 11 percent per year, due in seven years.
BUYER QUALIFYING The Qualifying keys on your calculator let you instantly pre-qualify prospective buyers. Mortgage lending pros will find these keys useful for doing instant loan pre-qualifications on the phone or in front of clients. Real estate agents/brokers can quickly pre-qualify clients so they can show them homes in their affordable price range.
(Cont’d) • the last press will display the allowable monthly debt. (Note: You can set your Qualifying Ratios to display first or last via the Preference Settings. 5. When calculating Annual Income Required (based on entered loan amount or sales price, term, interest and stored qualifying ratios), the first press of q or Q will display your stored ratios, the second press in succession will display the Annual Income Required, and the third press in succession will show the Allowable Monthly Debt. 6.
Storing New Income/Debt Qualifying Ratios Enter and permanently store new qualifying ratios of 30% for Income and 38% for Debt in q: STEPS KEYSTROKES Clear calculator Set qualifying ratios Return ratios to 28:36* oo 30:38q 28:36q DISPLAY 0.00 30.00-38.00 28.00-36.00 *Your ratios will be permanently stored, or will remain even after your calculator is turned off. You must enter new ratios to restore your calculator to the default ratios of 28:36 and 33:40.
Qualifying Loan Amount and Sales Price (Complete Example Including Down Payment, Tax/Insurance, Monthly Association Dues) The same buyers as in the previous example (who make $75,000 annually and have $500 in long-term monthly debt) wish to buy a lower-priced home and can only put $5,000 down. If you include estimated annual property taxes and insurance of 1.5% and 0.25%, respectively, a mortgage insurance rate of 0.
“Restricted” Qualifying Buyers who make $68,000 annually and have $750 in long-term monthly debt wish to buy a home offered at $175,000. They again can only afford $5,000 for the down payment. For what maximum loan amount can they qualify? Use previously stored 7.5% interest, 30-year term, Tax/Ins./MI rates of 1.5%, .25% and 0.6%, respectively, and qualifying ratios of 28%:36%. Re-enter 0.6% mortgage insurance rate, $50 assn. dues and $5,000 down.
“Unrestricted” Qualifying The amount calculated in the previous example is the loan they may qualify for, based on current income and debt. What are the buyer’s actual income and debt ratios? What does the “unrestricted” loan amount calculate to, and which side is it based on (i.e., buyer’s income or debt)? What is the buyer’s maximum allowable debt? STEPS KEYSTROKES DISPLAY Find actual ratios Find “unrestricted” loan amount Find allowable debt q “run” 22.76-36.00 q q 170,870.75 LA INC* 453.
Qualifying Comparison (Comparing 2 Different Loans or Ratios at Once) Given a buyer’s annual income of $45,000, $500 in long-term monthly debt, estimated monthly homeowner’s association dues of $50, an interest rate of 7.25% and term of 30 years, what loan amounts can they qualify for based on both 28%:36% and 33%:40% ratios? Also, find the corresponding total monthly payment for each. Estimate property tax/insurance rates of 1.25% and .3%, respectively, and a mortgage insurance rate of .45%.
Finding Income Required and Allowable Monthly Debt Using the 28%:36% ratios, how much income would a buyer need to finance a $250,000 home if they put 20% down? What is the maximum allowable debt? What is the dollar down payment and loan amount? What is the monthly payment? Use 6.75% interest for 30 years. Estimate property tax/insurance rates of 1.5% and 0.25%, respectively. Clear mortgage insurance rate to zero, as they are putting 20% down.
Solving for Actual Qualifying Ratios A buyer who makes $120,000 annually and has $550 in long-term monthly debt wants to borrow $275,000 to purchase a home. He has $68,750 for the down payment and the property tax/insurance rates are estimated at 1.4% and 0.2%, respectively; monthly homeowner’s association dues at $65. Use 6.5% interest for 30 years.
PICK-A-PAYMENT AND COMBO LOANS The following examples show you how to calculate P-A-P/EB P-A-P or Combo (1st/2nd Trust Deed) loans, in order to demonstrate the savings benefits to your clients. These loans can result in significant savings over traditional fixed-rate loans (with or without MI), during the first five years. P-A-P loans start out with an extremely low, below-market interest rate, typically for 1, 3, 12, or 36 months, or a Zero-month P-A-P*, a popular option, where there is no waiting period.
(Cont’d) Additionally, besides the entry of a Start Rate, the calculator allows the entry of a Start Payment for purposes of performing a “Pick-APayment” type of P-A-P loan. The user can also toggle between the entered Start Payment and Start Rate (the calculator will calculate the Start interest rate based on the entered Start Payment and other entered loan variables).
(Cont’d) *ROI: You can set a new ROI at any time by entering a new value, e.g., 8% ROI, enter 8 s %. Just remember this value is stored permanently, or you must enter a new value or perform a Clear All s x to reset. To recall the stored value, press ® s %.
(Cont’d) STEPS KEYSTROKES DISPLAY 4. Find the First Five P-A-P Payments:* Find 1st year payment ∏ Find 2nd year payment ∏ Find 3rd year payment ∏ Find 4th year payment ∏ Find 5th year payment ∏ 1,000.00 1,075.00 1,155.63 1,242.30 1,335.47 5. Find 5-Year P-A-P Savings (with no ROI% applied), 5-Year ROI% Savings (based on entered ROI%), and Total Cost: Display savings/ROI% range ∏ 1-5** Display savings (no ROI%) ∏ 20,231.89*** Display stored ROI% ∏ 10.00 Find ROI savings ∏ 27,395.
Pick-A-Payment Loan (Zero-Month/30-Term) vs. Standard Fixed-Rate Loan — Entering a Starting Interest Rate %, Changing ROI% and Payment Cap%, Solving Payment Options You’d like to show your client the savings of a Zero-month/30-term P-A-P loan with a starting interest rate of 3.95% over that of a fixed-rate loan. Find the P-A-P loan payments for a 10-year recast, the 5-year P-A-P savings and ROI% investment savings, and the total cost of the loan. Lower the ROI from 10% to 7% and the Payment Cap% from 7.
(Cont’d) STEPS KEYSTROKES DISPLAY 4. Find the First Five P-A-P Payments: Find 1st year payment ∏ 1,423.61 Find 2nd year payment ∏ 1,494.79 Find 3rd year payment ∏ 1,569.53 Find 4th year payment ∏ 1,648.01 Find 5th year payment ∏ 1,730.41 5. Find 5-year P-A-P Savings (with no ROI% applied), 5-year ROI% Savings (based on entered ROI%), and Total Cost: Display savings/ROI% range ∏ 1-5 Find savings (no ROI%) ∏ 31,462.37* Display stored ROI% ∏ 7.00 Find ROI savings ∏ 38,305.
(Cont’d) Total payments of traditional fixed-rate loan: Total payments of P-A-P loan: Total return with investment: 755,151.67 842,120.24 219,313.23 *Note that, in this case, the total cost of the P-A-P loan is higher than the fixed-rate loan; however, the initial savings is significant, at over $30K. At an entered ROI% of 7%, the return is over $38K. **Additionally, while the P-A-P payments exceed the traditional fixed-rate loan by $86,968, the investment return on the P-A-P cash flow is $219,313.23.
Equity Builder Pick-A-Payment Loan (Zero-Month/30Term) vs. Standard Fixed-Rate Loan FIXED-RATE LOAN EB P-A-P LOAN Loan Amount 300,000 Interest/Start Payment 7.5% Term 30 ROI% Pmt Cap % --- 300,000 $1,500 (Start Payment) 7.50% (Note%) 0 (Start No. of Mo.’s) 30 years 7% 5% Using most of the same values from the previous example, compare the fixed-rate loan to an Equity Builder P-A-P loan. The start payment for the regular P-A-P loan is $1,500, and the resulting initial EB P-A-P payment is $750.
(Cont’d) STEPS KEYSTROKES 4. Find the First Five EB P-A-P Payments: Find 1st year payment e Find 2nd year payment e Find 3rd year payment e Find 4th year payment e Find 5th year payment e DISPLAY 750.00 787.50 826.88 868.22 911.63 5. Find 5-year EB P-A-P Savings (with no ROI% applied), 5-year ROI% Savings (based on entered ROI%), and Total Cost: Display savings/ROI% range e 1-5 Find savings (no ROI%) e 18,108.80* Display stored ROI% e 7.00 Find ROI savings e 22,479.
Pick-A-Payment Loan (3-Month/30-Term) vs. Standard Fixed-Rate Loan — Finding P-A-P Savings for the First Three Years (Versus the First Five Years) You’d like to show your client the savings of a 3-month/30-term P-A-P loan over that of a fixed-rate loan. Find the savings and amortize for the first three years only. Also, find the P-A-P payments for years 1-3. Note: Change the existing ROI% and Payment Cap%. FIXED-RATE LOAN P-A-P LOAN Loan Amount 300,000 Interest/Start Rate 7.
(Cont’d) STEPS KEYSTROKES DISPLAY 4. Calculate P-A-P Savings & ROI for the First 3 Years*: Display range for savings and ROI calculations 3∏ 1-3 Find 3-year savings ∏ 23,369.28 Re-display ROI% ∏ “run” 6.50 Find 3-year ROI ∏ 25,882.55 5. Amortize the P-A-P for the First 3 Years Only: Display amortization range for first three years ∏ 1-3 Display total prin./interest ∏ 48,483.39 Display total interest ∏ 43,082.95 Display balance at end of three years ∏ 294,599.56 6.
Fixed-Rate Combo Loan (1st TD/2nd TD) Find the Combo Loan blended interest rate, combined payment, and 1st and 2nd loan amounts and payments, if you have the following parameters: FIXED-RATE COMBO LOAN (1st TD – 2nd TD) Loan Amount Interest Term LTV STEPS 100,000 8% – 10% 30 year – 10 year 80%:10% (Default) KEYSTROKES 1. Enter Combo Loan Values: Clear All sx Enter loan amount 100)l Enter 1st TD Interest:Term 8 : 3 0 ! Enter 2nd TD Interest:Term 1 0 : 1 0 s ! Recall 1st:2nd LTV ®sd 2.
Combo Loan vs. Fixed-Rate Loan with MI You’d like to show your client the savings of a fixed-rate Combo Loan over that of a standard, fixed-rate loan with MI. You have the following parameters: Price Interest Term MI LTV FIXED-RATE LOAN w/MI FIXED-RATE COMBO LOAN (1st TD – 2nd TD) 100,000 7% 30 0.5% 90% 100,000 7% – 9% 30 year – 30 year -80% – 10% (Default) STEPS KEYSTROKES DISPLAY 1. Enter Fixed-Rate Loan Values and Find Total Payment: Clear calculator oo 0.00 Enter price 100)P 100,000.
(Cont’d) STEPS KEYSTROKES Find equivalent fixed-rate loan payment 5 Find monthly savings over single fixed-rate loan w/MI 5 Find adjusted 2nd term (if savings applied to 2nd loan) 5 Find 1st TD loan amount 5 Find 2nd TD loan amount 5 Find 1st TD monthly pmt 5 Find 2nd TD mo. payment 5 Display LTV 5 DISPLAY 636.27 23.57 14.23 80,000.00 10,000.00 532.24 80.46 80.00-10.00* *A different LTV can be entered prior to calculating a combo loan (e.g., 8 0 : 1 5 s 5) without replacing the stored LTV.
(Cont’d) STEPS KEYSTROKES DISPLAY 1. Enter Fixed-Rate Loan Values and Find Total Payment: Clear calculator oo 0.00 Enter price 100)P 100,000.00 Enter down payment 10d 10.00 Enter interest 7ˆ 7.00 Enter term 30T 30.00 Enter MI (mortgage insurance) value •5s9 0.50 Clear Tax register 0s7 0.00 Clear Insurance register 0 s 8 0.00 Solve for P&I payment p 598.77 Solve for PITI payment (with MI) p 636.27 2.
Pick-A-Payment (3-Month/30-Term) Combo Loan vs. Fixed-Rate Loan w/MI You’d like to show your client the savings of a P-A-P Combo Loan over that of a fixed-rate loan with MI. Find the P-A-P Combo (1st TD/2nd TD) loan amounts, payments and total cost, if you have the following parameters: Loan Amount Interest Term MI LTV STEPS FIXED-RATE LOAN w/MI P-A-P COMBO (1st TD – 90,000 8.50% 30 0.62% 95% 90,000 1st: 4.95% – 8.00% 1st: 3 mo – 30 yr -80% – KEYSTROKES 1.
(Cont’d) STEPS KEYSTROKES DISPLAY 4. Find 1st TD Payments: Find 1st year payment Find 2nd year payment Find 3rd year payment Find 4th year payment Find 5th year payment N N N N N 404.54 434.88 467.50 502.56 540.25 5. Find 1st TD Loan Amount: N 75,789.47 6. Find 1st TD Total Cost: Find 1st TD total principal and interest N Find 1st TD total interest N Find 1st TD rem. balance N 208,642.62 132,853.15* 0.00 7. Find 2nd TD Loan Amount: N 14,210.53 N 140.73 8. Find 2nd TD Payment: 9.
Equity Builder Pick-A-Payment (3-Month/30-Term) Combo Loan vs. Fixed-Rate Loan w/MI Now show your client the savings of a EB P-A-P Combo Loan over that of a fixed-rate loan with MI. Find the EB P-A-P Combo (1st TD/2nd TD) loan amounts, payments and total cost, if you have the following parameters: Loan Amount Interest Term MI LTV STEPS FIXED-RATE LOAN w/MI EB P-A-P COMBO LOAN (1st TD – 2nd TD) 90,000 8.50% 30 0.62% 95% 90,000 1st: 4.95% – 8.00% 1st: 3 mo – 30 yr -80% – KEYSTROKES 2nd: 11.
(Cont’d) STEPS KEYSTROKES DISPLAY Enter 2nd TD Interest:Term 1 1 • 5 : 3 0 s ! 11.50-30.00 Enter 1st:2nd LTV values 8 0 : 1 5 s d 80.00-15.00 4. Find 1st TD Payments: Find 1st year payment Find 2nd year payment Find 3rd year payment Find 4th year payment Find 5th year payment sN N N N N 202.27 217.44 233.75 251.28 270.13 5. Find 1st TD Loan Amount: N 75,789.47 6. Find 1st TD Total Cost: Find total principal/interest N Find total interest N Find remaining balance N 171,517.97 95,728.50* 0.00 7.
APPENDIX Default Settings Performing a total Reset (see next page) will return the calculator to the following default settings: • Two Fixed Decimal Places • 12 Periods per Year = Reset to 12 Upon O • Property Ins. = Based on Price • Property Tax/Ins. = Values Cleared Upon O • Mortgage Ins.
Auto Shut-Off Your calculator is designed to shut itself off after about 8-12 minutes of non-use. Batteries • Mortgage Qualifier Plus Two LR-44 batteries. PX2 (#3442) • Mortgage Qualifier Plus PX2 Desktop (#43442) One 3-Volt Lithium CR-2032 battery. Replacing the Battery(ies) Should your calculator display become very dim or erratic, replace the battery(ies). Note: Please use caution when disposing of your old battery, as it contains hazardous chemicals.
Reset Manual Reset If your calculator’s display should ever freeze or “lock up,” press Reset — a small hole located to the left of the O key — to perform a total reset. (It is recommended you use a straightened paper clip, as the hole is extremely small). Keystroke Reset—Returning the Calculator to its Original Factory Settings You may at times want to reset your calculator to its factory settings (i.e., reset all registers and Preference Settings to their original default values).
Warranty Warranty Repair Service – U.S.A. Calculated Industries (“CI”) warrants this product against defects in materials and workmanship for a period of one (1) year from the date of original consumer purchase in the U.S. If a defect exists during the warranty period, CI at its option will either repair (using new or remanufactured parts) or replace (with a new or remanufactured calculator) the product at no charge.
Legal Notes This equipment has been certified to comply with the limits for a Class B computing device, pursuant to Subpart J of Part 15 of FCC rules. Software copyrighted and licensed to Calculated Industries, Inc., by Real Estate Master Technologies, LLC, 2006. User’s Guide copyrighted by Calculated Industries, Inc., 2006. QUALIFIER PLUS® and CALCULATED INDUSTRIES® are registered trademarks of Calculated Industries, Inc.
Designed in the United States of America Printed in China 5/06 UG3442E-A
