Share Gallery 1/share_gal_1.zip/share_gal_1/BF/BF171.ZIP/ACCEL.DOC

Text File | 1991-07-22 | 11KB | 224 lines

                      THE MORTGAGE ACCELERATOR

     How could I most effectively pay off my mortgage faster and
save interest costs and not have to refinance my mortgage?  How
much extra per month would I have to pay per month to pay off my
mortgage in 15 years rather than 30 years?  How much interest will
I save if I pay bi-weekly?  What would the ending balance of my
mortgage be at the end of 5 years or 10 years if I pay extra? These
questions and more can be answered with the MORTGAGE ACCELERATOR
program.

     The MORTGAGE ACCELERATOR is a Menu driven, modular program
written in GW-Basic and compiled with QBASIC for an IBM or
compatible.  You do not have to have GW-Basic or QBASIC to run this
program.  All you need to run this program is key ACCEL <enter>.

    There are 4 basic ways of accelerating payments on a mortgage;
1.  pay a fixed amount extra per month, 2.  pay the next month(s)'
principal amount with no maximum extra principal amount, 3.  pay
the next month(s)' principal with a maximum extra principal amount,
and 4.  pay bi-weekly where 1/2 of the regular monthly payment is
put aside somewhere and at the 6th and 12th payment, the extra 1/2
amount is sent as an extra amount toward principal.

     This program has 5 different options of which to choose.  It
has 3 different options to evaluate accelerated mortgage options,
an option to view the documentation about this program and an
option to return to the directory or drive from where you executed
this program.

                   What each Menu Option Does!

 1.  Displays 4 different acceleration methods and gives 10
different examples using these methods; 3 different extra payment
amounts, 3 next month(s) extra principal amount(s) with no maximum
payment, 3 with next month(s) extra principal(s) with a maximum
payment and a bi-weekly payment option. Determines how much
interest could be saved and the payoff period using each
acceleration method.

 2.  Displays and/or prints a comparison table of the interest
paid, principal paid and an ending balance of a loan that is
amortized on the left half of the display and on the right side of
the display, the same loan using one of the four acceleration
methods.   Can be produced by month, by year or by payment number.

 3.  Displays and/or prints an accelerated amortization table.
Allows for any of the 4 acceleration methods. Provides a breakdown
of each payment to principal and interest, a cumulative total for
each of these amounts and an ending balance.

 4.  Instructions on how to use this program.  Provides information
on how to use this program.

 5.  Returns to whatever directory from which you executed this
program.  Provides a means to exit the menu.

 (C) Copyright JSOFT 1991

                   ABOUT MORTGAGE ACCELERATION

    A large part of the initial payments on a mortgage go toward
interest.  This is especially evident for a 30 year mortgage. You
can reduce the interest amounts and payoff the loan more quickly
by accelerating the payments.  One way of accelerating is to add
the next month(s)' principal to the regular payment.  Adding the
next month's principal to the payment would not amount to that much
in the early years of the loan because most of the payment goes
toward interest.  However, as the loan gets paid down more of the
payment goes toward principal.  This could amount to a very large
payment by the time the loan gets over half paid off.  This program
has a feature to establish a maximum payment amount.  If you input
a dollar value as your maximum payment, this program will still add
the next month's principal to the payment but only in the amount
of the maximum payment.

   The maximum payment is the maximum principal and interest amount
you would pay for each payment when the next month's principal
amount plus the regular payment amount equals that amount.  For
example, the monthly payment on a $55,000, 10.5 %, 30 year mortgage
would be $503.11.  Over the life of a loan you would pay a total
of $181,119.60 of which $126,111.12 would be interest. If you were
to pay 1 additional month's principal each payment and establish
a $665.00 (principal and interest) maximum payment amount, the
total you would pay for this loan would be $120,789.69 of which
$65,789.69 would be interest; a savings of $60,321.43.  You would
also pay it off in 197 months rather than 360 months.  Your monthly
payment would increase until the 116th payment and would remain at
$665.00 for the duration of the loan.  The savings would be even
more if you added the next 2 month's principal or even more to the
payment.  If you did not establish a maximum payment for this
example, you would pay off the loan in 90 months, save $94,412.62
in interest and your last payment would be 503.11 plus 1,475.03
extra per month.

   Another method of accelerated payments would be to add a fixed
amount to the each payment.  If you take the same $55,000, 10.5%,
30-year, $503.11 a month loan and add $25.00 extra per month you
can pay off the loan 89 months sooner and save $34,291.88 in
interest costs.  A larger amount extra per month would pay it off
even sooner with a larger interest savings.

   The bi-weekly payment method is another way of accelerating
payments.  It is becoming more popular especially for people who
get paid by-weekly.  It allows for 2 half payment amounts every
other week which amounts to an extra half payment every 6th month
and 12th month.  This amounts to 1 extra payment per year.  Using
this method, using the same mortgage amounts, would save $46,112.42
and pay off the loan in 248 months.

                     HOW TO USE THIS PROGRAM

MENU
   The Menu program presents 3 different options to make comparison
on various loan acceleration combinations, an option to view the
documentation for this program and an option to return to whatever
directory from which you executed this program.  If you stop any
of these modules by doing a <Cntl Break> or the program stops
because of an error, you can get back to this menu by keying ACCEL
<enter>.

Option 1
   If you ever wanted to see how the varying effect on interest
paid, total payments and how more rapidly a loan is paid off by
accelerating payments, this module will provide it.  This module
evaluates 4 different acceleration methods and provides 10
different examples; 3 methods of fixed extra amounts, 3 next
month's principal payments without a maximum payment, 3 next
month's payments with a maximum payment and a bi-weekly
acceleration method.

   Inputs:  Loan amount, interest rate, term in years, initial
extra payment amount and increment (i.e. $25 extra with a $25
increment will evaluate the effect of paying $25, $50, and $75
extra per month),  next month's principal and increment (i.e. 1
and increment of 1 will evaluate 1,2,and 3 month's' extra principal
amounts and maximum payment. The bi-weekly option will just make
an allowance of an additional half payment every 6-month period
totaling 1 additional payment per year.

Option 2
   If you ever wanted to see a comparison between a regularly
amortized loan to the same loan if it were accelerated, this option
will provide this information.  This module can utilize any of the
acceleration methods and provide a side-by-side comparison of the
breakdown of each payment to principal and interest and an ending
balance.  By viewing this you can see how much more rapidly the
ending balance goes down by accelerating and the point at which it
is paid off in comparison to the ending balance with regular
amortization.

     You can view and/or print this information by month, by year
or by payment number.  If you request by month or year, you can
enter an outstanding balance amount.  This feature takes into
account that you may have an old mortgage that you've been making
payments on and now wish to start accelerating payments.  If an
outstanding balance is entered, the module will amortize to the
outstanding balance, give you a message that acceleration will now
begin and accelerate the payments from that point forward. This
information is displayed screen-by-screen or it can be printed.

     If you print this information you can give yourself credit by
printing "Produced by  (your name, address and telephone number)
on the last page.  This feature may provide a means for further
business if you decide to provide this service to others.  If you
don't want to print this information you can by-pass it.

  Inputs:  Loan amount, Interest rate, term in years or months and
a choice to enter number of next month's principal, enter a fixed
amount to each monthly payment or bi- weekly. There are edits in
this option that prevent the entering of more than 12 next month's
principal payments or an extra amount extra per month that is
greater than the loan amount.

   Further prompts ask whether you want to see the amounts by
month, year or payment number.  If you request by payment number
you will see the monthly payment breakdown with no yearly totals.
If you select by month or year you will be prompted for the
beginning month and year.  If you select by month or year, you will
see the monthly payment breakdown by principal and interest and the
ending balance with yearly totals.  If you request by year you will
only see yearly totals.  When you request by month or year have the
option to enter an outstanding balance.  If you hit enter at this
prompt the outstanding balance will default to the original
mortgage amount.

   You will be further prompted whether you want this information
printed or just shown screen-by-screen.  If you request printing
you are prompted as to whether single sheets will be loaded or
continuous forms.  As each screen is displayed you will have the
option to continue to see subsequent screens, enter new values or
return to the Main Menu.

   If the table is printed, you will be prompted for your name,
address and telephone number which can be printed on the last page
of the table.  This is optional so if you don't enter anything it
won't print anything.

Option 3.
   If you ever wanted an amortization table that allowed for an
acceleration method, this module will provide it.  Much the same
as the comparison table, this module allows for a fixed amount
extra, next month(s)' principal with or without a maximum amount
or bi-weekly acceleration. It provides detail by month with
cumulative amounts by year, cumulative amounts by year only or
detail by payment number.

   Inputs:  Loan amount, interest rate, term in year or months.
After calculating the monthly payment it prompts whether you want
to re-enter values or produce the table.  The remaining prompts are
the same as those in option 2.

Option 4.
    Instructions on how to use this program.

    Inputs:  <Enter> to view screen-by-screen or 1 to print.

Option 5
     Return to the directory or drive from which you executed this
program.

     Inputs:  None
END