home
***
CD-ROM
|
disk
|
FTP
|
other
***
search
/
Share Gallery 1
/
share_gal_1.zip
/
share_gal_1
/
BF
/
BF200.ZIP
/
MTGDOC.DOC
< prev
next >
Wrap
Text File
|
1992-01-15
|
42KB
|
862 lines
T H E M O R T G A G E M I S E R
Version 1.3
Released January 1992
By Practical Solutions
16541 Suite# 343
Redmond, Wa. 98052
(206) 868-3336
Copyright (C) l991 by Jim Peters
All Rights Reserved
_______
____|__ | (R)
--| | |-------------------
| ____|__ | Association of
| | |_| Shareware
|__| o | Professionals
-----| | |---------------------
|_______| MEMBER
CompuServe (70751, 1772)
pg 1
T A B L E O F C O N T E N T S
Product Examination Information...........2
ASP Member................................2
Purchase / Registration...................3
License Restrictions......................3
Product Upgrades..........................3
Product Support...........................4
Warranty..................................4
Customer Participation....................4
System Requirements & Setup...............5
Definitions & Terminology.................6
Introduction..............................7
Getting Started...........................8
A Mortgage Commentary....................17
pg 2
P R O D U C T E X A M I N A T I O N I N F O R M A T I O N
The Mortgage Miser program hereafter referred to as "The Product" is not
"Public Domain Software", nor is it "Freeware". It is the registered
property of the Practical Solutions Company, Copyright (C) l991.
A limited use license is hereby granted to persons who wish to review the
product for suitability to their particular requirements. Usage of the
product beyond a reasonable 10 day examination period shall be considered
acceptance, and requires registration. Continued usage of the product
beyond the examination period by Non-Registered persons is prohibited.
Neither The Mortgage Miser program nor any of its documentation components
may be modified in any respect, including de-compiling, disassembling
and/or any other form of reverse engineering. All documentation components
(files) must be preserved intact and retained with the executable computer
program(s).
Distribution of The Mortgage Miser program is encouraged provided the above
conditions are met. The product may be distributed through public shareware
channels including electronic bulletin boards provided no fees are accepted
for such distribution, with the exception that a fee not to exceed $5.00 US
may be charged by legitimate shareware businesses for replication and
overhead expenses.
A S P M E M B E R
Practical Solutions is 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
49442-9427 or send a CompuServe message via CompuServe Mail to ASP
Ombudsman 70007,3536.
pg 3
P U R C H A S E R E G I S T R A T I O N
Anyone who intends to continue using The Mortgage Miser program beyond the
10 day examination period is encouraged to legitimize their usage through
purchase registration. For the nominal $39.95 Registration fee the user
will receive the latest version of the product, including documentation
files, and will be notified when major upgrade enhancements and additional
features become available. Site Licenses are offered at the rate of $99.95.
Registration is accomplished as follows:
Print the Purchase Registration Form from the MAIN MENU of The Mortgage
Miser Program using option F5. Complete the information, enclose the
registration fee, and mail your order to Practical Solutions. You will
receive a registered copy of the latest version of The Mortgage Miser.
Current distribution media for The Mortgage Miser is one 360KB 5 1/4"
diskette. If your system requires the 3 1/2" disk media, please note
that requirement on the order form.
Non-residents of the United States please be advised to make checks drawn
on U.S. Funds. Washington State Residents must include 8.2% Sales Tax for
each copy requested. Please include $1.50 for shipping and handling.
L I C E N S E R E S T R I C T I O N S
Product registration grants purchasers a limited use license and one (1)
copy of the product for personal use on one (1) non-networked Personal
Computer. Site licensing for multiple users may also be obtained (See
Purchase Registration). Registered users will be provided with the latest
software updates and product documentation at the time of purchase and will
be notified of any major upgrade enhancements. Neither The Mortgage Miser
program nor any of its documentation components may be modified in any
respect, including de-compiling, disassembling or any other form of reverse
engineering. Duplication of the registered version of the product is
prohibited.
P R O D U C T U P G R A D E S
Registered users of the product may upgrade to the latest software version
by sending $10 for each upgrade copy requested. Please use the Purchase
Registration Form from the MAIN MENU for upgrade requests, noting any
changes in address or telephone number.
pg 4
P R O D U C T S U P P O R T
Customers who purchase (register) the product are entitled to receive 90
days free product support from the date of purchase. Product support may be
provided by mail or telephone by contacting:
Practical Solutions
16541 Redmond Way, Suite 343
Redmond, Wa. 98052
Telephone (206) 868-3336 (Message System) CompuServ (70751,1772)
Practical Solutions will make every attempt to expediently answer any and
all questions and resolve any problems that might arise from the use of
this product. All comments and suggestions for improvement are welcomed.
W A R R A N T Y
Practical Solutions warrants that the diskette media upon which the
software is recorded shall be free from defects in material and
workmanship, under normal use and conditions, for a period of sixty (60)
days from the date of purchase.
EXCEPT FOR THE FOREGOING LIMITED WARRANTY, THE MORTGAGE MISER SOFTWARE IS
PROVIDED "AS IS" WITHOUT ANY WARRANTY, EXPRESSED OR IMPLIED, INCLUDING, BUT
NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
The Practical Solutions Company shall not be liable for any damages,
whether direct, indirect, special or consequential arising from a failure
of the product to perform or operate in a manner desired by the registered
or unregistered user.
The Practical Solutions Company shall not be liable for any damages to data
or property which may be caused directly or indirectly by the use of this
product.
In no event shall the Practical Solutions Company be liable for any
damages, including any lost profits, lost savings or other incidental or
consequential damages arising out of the use or persons inability to use
this program, or for any claim by any other party.
C U S T O M E R P A R T I C I P A T I O N
In an effort to provide Total Customer Satisfaction, Practical Solutions
welcomes your comments and suggestions related to this product. We consider
your criticisms "GOLDEN" and welcome your input. Please feel free to call
or write and describe any situations you encountered, features you would
like to see added in the future, suggestions, or words of encouragement.
Please note the version of the product you are using.
Practical Solutions intends to improve the product and provide upgrades
based on customer input. Your comments are VERY IMPORTANT to us.
pg 5
S Y S T E M R E Q U I R E M E N T S
A N D S E T U P
System Requirements
To use The Mortgage Miser, you Need only an IBM PC or Compatible Computer
with a minimum of 256K RAM Memory, one Floppy Diskette Drive, and an IBM
Compatible Printer. A hard disk system is recommended. Your system must
also have a DOS Version 2.0 or newer operating system.
Floppy Disk System
Make a "working copy" of the master disk using the DOS Copy Command. Place
the WORKING COPY diskette in the disk drive.
Fixed Disk Setup
To place the program and associated files on a fixed disk, please follow
these instructions:
Boot your computer to the fixed disk.
When complete, place the Mortgage Miser disk in floppy drive A.
Determine the fixed disk you will load the product to. ( ie: C or D )
-
Position to the root directory of that disk if different than the default
disk. (ie for "D" Type D: )
At the DOS Prompt type:
MD\ MISER
CD\ MISER
COPY A:*.* C: ( or COPY A:*.* D: etc.....)
-
This should load all files from the floppy disk in slot A to the
sub-directory "MISER" on the fixed disk drive.
If you had any trouble with this, you should refer to your DOS manual under
the topic DIRECTORIES. (See Make Directory and Change Directory)
Running The Program
To Run the program, simply type "MTG"
All mortgage models created by The Mortgage Miser will be placed on the
disk drive the program was executed from. No path statements are necessary.
pg 6
D E F I N I T I O N S & T E R M I N O L O G Y
DEFINITIONS & TERMS:
The Mortgage, a Death Pledge? (Hey, What a Concept!!!!)
MORT \'mo(e)rt\ n
[(fr. L mortus, fr. pp. of mori - death, to die) + GAGE]
GAGE \'gaj\ n
[(fr. Gmc vt. 1. archaic:pledge 2. archaic:stake,risk)]
o FUNCTION KEYS
Keyboard keys with the letter "F" in front of a number.
o MENU
The display of a group of related functions (options).
o MENU OPTIONS
Menu Options are items you can order from the Menu.
o RECURRING PRE-PAYMENTS TO PRINCIPAL
These are Pre-Payments against The Principal balance of the Mortgage.
They are Calculated IN ADDITION TO your normal REQUIRED payment. They
are used when you plan to make the same Pre-Payment for a series of
months. Recurring Pre-Payments continue in the plan until you stop them.
o LUMP SUM PRE-PAYMENTS TO PRINCIPAL
Lump Sum Pre-Payments To Principal are just like Recurring Pre-Payments
EXCEPT THEY ARE ONLY IN EFFECT ONLY FOR THE MONTH THAT YOU SPECIFY. They
are applied IN ADDITION TO required Payments and any Recurring
Pre-payments against the Principal.
o INTEREST RATE CHANGES
Used primarily for Adjustable Rate Mortgages (ARM's). You can select the
Payment Number you expect Interest Rates to change.
o BALLOON PAYMENT
Used when mortgages have an early "Cash Out" stipulation in the
contract. If these are present, they are often set up for 5 to 7 years.
The mortgage is generally amortized over 30 years. Example - a balloon
payment set up for 5 years would be "called" on payment number 60, at
which time the balance is due in full.
o PAYMENT TO LOAN RATIO
This is a number calculated to reflect the number of actual payments you
have made in order to reduce the mortage by the face value of 1 normal
payment.
o AMORTIZATION
The way a lending institution calculates the amount of interest you get
to pay over a fixed period of time. The amount of your payment that is
applied to the principle INCREASES over time and is IMPROVED when the
unpaid balance is REDUCED. The end result of a positive amortization
mortgage is a balance of ZERO.
pg 7
I N T R O D U C T I O N
The Mortgage Miser is a powerful mortgage modeling tool which was
originally designed to answer OUR question "What if we did __?__ to the
mortgage ?". Our goal was simply to accelerate our mortgage as quickly as
possible. Although we found a number of software packages that performed
many types of mortgage amortizations, we found none that accomodated the
"What If" acceleration modeling capabilities we needed.
The product was designed for the average person with a mortgage, for those
who are thinking about getting a new one, or for anyone considering
refinancing. Although it was designed for the homeowner, it's suitable for
use by others including Realtors, Brokers and Accountants who also may find
the product helpful.
Our philosophy is simply that "Get Rich Quick" schemes seldom work for
those of us who work for a living. We believe that the reality of
"financial security" (as such) must begin with debt elimination, regardless
of the type of debt, followed by the maximum utilization of future incomes.
In other words - honest work, planning, and a little discipline.
Planning is necessary to attain this or any other REAL goal. The Mortgage
Miser provides one of the tools necessary to help PLAN the reduction of
mortgage debt obligations by means of setting up models in the system (in
the privacy of your own home) and running "what-if" scenarios against them.
Although the product has many features, we think the most important one is
the "Plan" the product generates once a model has been created. Without a
plan that you can actually VISUALIZE, there's really only a "pre-concrete"
notion, certainly no firm direction, and therefore no commitment.
Measuring your progress is the tangible element you need in order to
believe in any long range endeavor.
It was YOGGI BERRA who was once quoted as saying "If You Don't Know Where
You're Going, Any Road Will Get You There.....".
The Mortgage Miser is simple to use. It was designed to be simple. There is
nothing magic about it, although you may be surprised at the results you
see when you begin applying Pre-Payment variables to the models you create.
On that note, it probably goes without saying that this product was
developed to help PEOPLE and not necessarily financial institutions. So God
bless Yoggi Berra and good luck with The Mortgage Miser.
pg 8
G E T T I N G S T A R T E D
This program is very easy to use. In virtually all cases, the information
you enter is directly opposite a self explanatory text. In addition, there
will also be a message near the bottom of the screen (next to a blinking
pointer) each time a new bit of information is required.
In the event that the program encounters a problem, an audible alarm is
sounded and an appropriate course of action is displayed for you to take.
Any DOS Operating System messages will appear on the single bar line at the
bottom of the screen. Those generally tend to crash a program but don't
hurt anything in most cases. Just start the program over if this occurs.
To Run the program, simply type "MTG"
You should see a display with the words "The Mortgage Miser" displayed in
bold letters. Press "Enter" again.
If you have the UNREGISTERED Version, then the next screen you should see
is the credits and registration screen. In the Registered Version, you will
not see this screen at start up time. Please press "Enter" again.
At this point, you should be at the MAIN MENU.
pg 9
THE MAIN MENU
From the MAIN MENU, you are presented with 6 Options from which to select.
You can execute any of these by pressing an "F-Key" (Function Key). You can
also exit the program by pressing the Escape <Esc> Key.
All other screens will eventually bring you back to this point under normal
operating circumstances.
Press "F1" from the MAIN MENU and you will be presented with a brief
description of what this program can do. Press any key to return to the
MAIN MENU.
Press "F2" from the MAIN MENU and a screen with text that asks for
information should appear. This is where you would set up new mortgages.
Don't get into that yet though. We'll come back to this later. For now,
press the <Esc> Key and return to the MAIN MENU. We're just poking around
this time.....
Press "F3" from the MAIN MENU to Retrieve a Mortgage Model that I put out
there for you to see. Press "F4" to review models already created. Now
press <Enter> or <Esc> to get back to the retrieval screen. Look at the
black box in the lower right portion of your screen. There's a blinking
arrow there to catch your attention. Now type the model name "TEST".
Information from the model "TEST" should now be displayed on the screen. At
this point you have 3 choices:
(NOTE: We want the "3rd" one this time because we're just looking.... )
1 Press any key to accept that model and work with it.
2 Press "N" to reject it and try again.
-> 3 Press <Esc> to return to the MAIN MENU
Hopefully we're all back together again now at the MAIN MENU. If we aren't,
just keep pressing <Esc> from wherever you are until we get there.
NOTE: At some point, you may wish to delete models you no longer need. To
delete these "files", please refer to the "DEL" function in your DOS
manual. Be advised that the Mortgage Models all have an extension of ".MTG"
after each file name. You will not see (or refer to) it when working with
the Mortgage Miser program itself, but you will need to use it when
deleting models with the DOS command "DEL".
Press "F4" from the MAIN MENU to solve for unknown factors in a mortgage.
Go ahead and play with this one yourself. It doesn't connect to any other
part of the Mortgage Miser modeling functions. With this option you can
solve for unknown PAYMENTS, INTEREST RATES, LOAN AMOUNTS or MORTGAGE TERMS.
When you're done press <Esc> to return to the MAIN MENU.
Press "F5" from the MAIN MENU to print a Mortgage Miser order form.
Press <Esc> to return to the MAIN MENU.
Pressing "F6" will print the documentation that you're already reading so I
won't expand on this option.
At this point you're ready to start using the Mortgage Miser.
pg 10
NEW MORTGAGES
From the MAIN MENU, Press "F2".
You should now be in the NEW MORTGAGE SETUP Screen. Rather than taking you
through this step by step, I'd like you to try it yourself. In the event
you make a mistake, the program should correct you. You can't hurt anything
here. If you need to change something entered previously, use the ARROW UP
key.
The TOP half of this screen is where BASIC Mortgage Information is entered,
that which is needed to amortize a mortgage.
Once you've entered all of the basic mortgage information, you will see the
calculated monthly mortgage payment displayed adjacent to that data. Please
note, this payment DOES NOT include Taxes and Insurance. It is Principal
and Interest ONLY. If this is all you needed to know, you would just press
<Esc> to return to the MAIN MENU. If you would like to try other numbers,
simply press F2 to start over. To continue, press any other key.
The bottom portion is Optional INFORMATIONAL TEXT, and is only necessary
for identification. It comes in very handy though if you intend to print
out a "Package" Model for yourself or a friend or client. This program has
a provision for changes later on, so don't be alarmed if you need to fix
something after the fact. If you don't need this information, press Enter.
Follow the informational messages at the bottom of the screen until you're
finished. When you've pressed the "Return" or "Enter" Key the last time,
you should find yourself at The BASIC MORTGAGE INFORMATION Screen.
THE BASIC MORTGAGE INFORMATION SCREEN
Let's continue through with this example. Press any other key, and you
should see 3 questions displayed in the LOWER portion of the screen. If you
were to plan Pre-Payments or Interest Rate Changes from the onset of
building this model, this is where you'd tell the program you want to do
that by placing a "Y" in each corresponding box.
Don't worry if you goof and put a "Y" in a wrong place. You get a chance to
fix that by pressing "F2" after you've answered all 3 questions.
For now let's not answer these with a "Y". Instead, press the <Enter> or
<Return> Key 3 times. Notice that the computer defaulted to "N" for all
three questions. Now, read the informational messages at the bottom of the
screen and then press <Enter> again 1 more time to go to the next screen.
Now you should be at the MORTGAGE MODEL ACTIVITY MENU. This is where you
decide what you want to do with this model you've just built.
pg 11
THE ACTIVITY MENU Screen
The ACTIVITY MENU has 7 Options from which to choose. The first 4 have to
do with displaying or printing a Mortgage Amortization Schedule or Summary
Statistics. I would suggest that you use the "F2" option of this screen
when you're simply running "What if" scenarios. That way you don't have to
view a lot of material to get to the bottom line.
Option "F5" simply bails out of this model and takes you back to the MAIN
MENU. Right now, it works the same as the <Esc> Key.
Option "F6" is used to save your model to disk when you've finished with
it. For this exercise, let's go ahead and select "F6" to save our model
before we make any changes. That will give us a starting point from which
to make comparisons against variations we might make if we should so choose
to later. Press "F6" if you haven't already done so. This screen looks
almost exactly like the one we visited in the MAIN MENU overview when we
retrieved the model "TEST" doesn't it?
Let's give our model a name of "TESTx" and Press the <ENTER> Key. You must
be sure that you don't unintentionally give your model the same name of one
that already exists. If you should, the previous version will be
OVERWRITTEN with the new version you're working with.
The screen should display the message " No Variables Saved ". That's
because this is a simple mortgage model that we didn't do anything with.
Now press any key to continue. You should be back at The ACTIVITY MENU
again. Congratulations, you just "saved" (or stored) a model on disk.
Now if you should ever want to , you can retrieve that model from the MAIN
MENU using Option "F3". If you can't remember its name, then remember that
Option "F4" will REVIEW SAVED MODELS. Once you retrieve your saved model,
you'll find yourself back at this point where you can work with it again -
RIGHT WHERE YOU LEFT OFF !!!!
Press "F7" to display the screen that lets you select specific model data
elements for change. By selecting F7 you should see a display entitled
REVIEW MODEL VARIABLES FOR CHANGE.
pg 12
REVIEW MODEL VARIABLES FOR CHANGE Screen
If there's one thing you'll need to do when you're running "What-if's" with
your model it's make changes. You'll also need to make changes once you're
actually using a plan - especially in the Pre-Payments area.
That's what this screen is for. It points you to specific groups of
information in your model that you might want to change or modify as your
model or plan unfolds.
This screen is a little different from the others, in that you must press
the "F2" Key AFTER you've placed an [X] in the boxes you selected for
modification. The cursor bounces around pretty quickly, so look for the box
that's blinking before you key in an "X". If you put an [X] in a box you
don't really want, just keep pressing the <ENTER> key and you'll come
around to it again. Then just hit the <ENTER> key again and it's gone...
Go ahead and put an "X" in the box for BASIC MORTGAGE Information or the
one for ADDITIONAL TEXT Information. Since we haven't done Variables yet,
let's not select any of those just now....
Press "F2" and you should be back at the MORTGAGE SETUP Screen again. If
you requested to change the BASIC Mortgage Information or the Additional
Information Data from the REVIEW MODEL VARIABLES FOR CHANGE Screen, you can
now Press "F2" or "F3" to ERASE that portion of what you had before and
start over.
NOTE: You can change specific mortgage information at this time, but the
program will RETAIN any other information including variables that you had
in effect unless you modified or eliminated them as well. You will return
to the ACTIVITY MENU again when you've finished with your changes.
Follow the informational messages closely when making any changes. One of
the most common points of confusion is when a user makes a change to the
BASIC Mortgage elements (Mortgage Amount, Term or Rate) and then forgets
he/she still has variable factors (like Pre-Payments) in effect. Are you
back to The WORKING MENU Yet?
After making changes, we probably ought to save the model again. This time
you decide whether or not to call it "TESTx" and overlay the old version or
give it yet another name - perhaps "TESTy". Your choice. Why not go back to
the MAIN MENU now and try option "F4" and see how many models you have out
there on disk?
Now it's time to work with the Variables. With this model, of course, we
could have selected Option "F7" and "added" some Variables, but for our
exercise, lets get back to the MAIN MENU and start over with a new model.
Please Press "F5" or <Esc> to get back.
pg 13
WORKING WITH MORTGAGE VARIABLES
From the MAIN MENU, select Option "F2" to set up a new mortgage just like
we did in our overview exercises. Set up a Mortgage for $100,000 at 9.5%
for 15 years and start it on Month 1 (Jan). Don't bother with the Optional
Informational Text following the basic mortgage factors unless you want to.
When you reach the BASIC MORTGAGE INFORMATION Screen which displays the
payment, etc, press the Return Key to display those 3 questions we bypassed
earlier on the LOWER half of the screen.
These are the "Variables" and they have to do with Recurring Pre-Payments,
Lump Sum Pre-Payments, and Interest Rate Changes. Answer "Y" to all 3 of
these for this exercise. In most cases, you won't answer "Y" to the
Interest Rate Change question unless you have an "Adjustable Rate Mortgage"
or unless you're planning on getting one. NOW, press the <Enter> Key.
You've just told the program you want to schedule all 3 of the Variable
activities allowed for in the program.
Before we start into this section, I want to let you know that you'll need
to do some simple arithmetic in your head here. In these Variable activity
screens, you'll need to use "Payment Numbers" to start an activity on. By
Payment Number, it doesn't mean "Jan 1991", it means payment number "01" or
"180" or whatever payment NUMBER it is.
Example, if you began your mortgage in January and you're planning variable
activity beginning on the first payment of the first year, and then
something else beginning on the first payment of the second or third years,
you'll use Payment Numbers "01", "13" and "25". Where "13" is the first
payment of the second year and so on. If you're already into a mortgage,
you'll probably need to get out your statements and do some counting.
I would suggest that when you get serious about planning these variables,
you first print a complete amortization schedule using a basic mortgage. It
will give you the payment numbers you need to use as reference.
pg 14
RECURRING PRE-PAYMENTS TO PRINCIPAL
In this exercise, we'll be setting up 3 Recurring Pre-Payment schedules for
planning purposes. If this were a real plan, and things don't work out the
way we'd anticipated downstream, we could go back and make adjustments
later using Option "F7" from The ACTIVITY MENU.
The prompt is asking you for a Beginning Month from which to START the
Recurring Pre-Payment To Principal activity. These Recurring Pre-Payments
stay in effect until you optionally choose a future month (Payment Number)
to change or stop them. You can turn them off by selecting a Payment Number
and a corresponding value of zero.
Select payment number "13" and press the <Enter> key.
Now enter the amount 100.00 and press the <Enter> key.
The screen will display your entry above in the first position of the grid
with the words " thru END" following your payment number. Remember, this
will stay in effect until you turn it off or change it.
Now select payment number 25 and press the <Enter> key.
Enter the amount 200.00 and press <Enter>.
The screen will display your entry below the first, again with the words
"thru END" following. Notice how it changed the first item in the grid from
"13 thru END" to "13 thru 24".
Now select payment number 37 and press the <Enter> key.
Enter the amount 300.00 and press the <Enter> key.
See how it works?
Now let's make it "hiccup"... Key payment number 8 and Press <Enter>. It
doesn't like payment number 8 because you've already scheduled past it.
Press <Enter> one more time when you've entered all of your variables. At
this point, you're asked if you want to cancel the whole thing and start
over. If you made a mistake, press "F2" and the program will simply erase
all that you've just entered. You can start keying again if that's the
case. Otherwise, just press <Enter> one more time to complete the
scheduling of your Recurring Pre-Payments to Principal Variables.
Note:
If you had selected Option "F7" (MODIFY/CHANGE) from the ACTIVITY MENU and
then opted to change any of the variables, you would be presented with a
screen displaying all previously scheduled activity for that variable.
If you wanted to "Add" additional entries, then you would just begin keying
right from where you left off. If your model didn't work out like you'd
planned, then just press <Enter> and select the "F2" option to wipe the
entire schedule out and start over.
pg15
LUMP SUM PRE-PAYMENTS TO PRINCIPAL
We're going to set up 2 Lump Sum Pre-Payments to Principal in this
exercise. These are similar to the Recurring Pre-Payments To Principal
except that when you select a Payment Number, it will be the ONLY Payment
Number that the amount you enter will be applied to. These don't re-occur,
but they DO take effect IN ADDITION TO any Recurring Pre-Payments you may
have scheduled, so be careful and check your Recurring Pre-Payment Plan and
make sure you don't have any overlap that you forgot about.
Select payment number 9 and press <Enter>.
Enter the amount 1,500.00 and press <Enter>.
Select payment number 27 and press <Enter>.
Enter the amount 2,000.00 and press <Enter>.
Note: The Lump Sum Pre-Payment on Payment Number 27 is going to overlap
with a schedule we set up in the Recurring Pre-Payment plan. But in this
case we want it to - because we're just planning on having $2,000 in
additional funds available to us on that month.
As you can see in these examples, we would be planning to apply the
proceeds from some other additional source of income to our mortgage. This
way the money doesn't get spent before it's received. Ever had that happen
to you? That's why we call it a plan !!!
That's all for this one. Press <Enter> twice and you should be at the
INTEREST RATE CHANGE screen.
pg 16
INTEREST RATE CHANGES
This one is kind of a combination of the first two. You select the payment
number you want the Interest Rate to change on and it stays in effect until
you tell it otherwise. This type of activity is specifically designed for
ARM's or Adjustable Rate Mortgages.
Select payment number 13 and press <Enter> (Beginning Payment of year 2)
Enter the interest rate 10.5 and press <Enter>.
Select payment number 25 and press <Enter> (Beginning Payment of year 3)
Enter the interest rate 11.5 and press <Enter>.
Select payment number 37 and press <Enter>. (Beginning Payment of year 4)
Enter the interest rate 12.5 and press <Enter>.
That should do it for interest rate changes for now. Press <Enter> twice
and you should be at the ACTIVITY MENU.
You've just scheduled all 3 of the variable activity types the Mortgage
Miser accomodates. Why not take a look now at the effect of your changes by
selecting options F1, F2, F3 and F4.
REMEMBER: Catalog your model with Option (F6), if you want to keep it,
before exiting to the MAIN MENU. Failure to catalog the model will result
in losing your plan and necessitate a lot of rekeying later.
pg 17
A M O R T G A G E C O M M E N T A R Y
The driving concept behind the development of the Mortgage Miser is that
we believe home mortgages are just as much a debt as any other kind of
financial obligation, and, as such, they should be dealt with aggressively.
There are a lot of people who will argue that you need a home mortgage for
tax purposes. We don't subscribe to the notion that you attain financial
security with tax credits, but rather by eliminating debt obligations and
then making wise choices with your financial reserves (IN OTHER WORDS,
COLLECT INTEREST - DON'T PAY IT!!!)
To the contrary, we believe that by paying your taxes and using that
portion of your income that would otherwise be used to make the lenders
wealthy, the average person is far better off. It does take resolve and
most of all it takes DISCIPLINE. There's no doubt about it, while you're
working to accomplish YOUR goals, your friends and neighbors will probably
continue buying "toys" like there's no tomorrow. Hang in there.... There
will be a tomorrow!
Speaking of tomorrows, statistics show that about 98% of all Americans who
reach retirement age either (a) cannot afford to retire, or (b) enter
retirement with incomes below the poverty level. The message is fairly
clear.... Things don't self organize. YOU ARE RESPONSIBLE FOR PLANNING YOUR
SECURITY. You, and no one else!
It's a good idea to get started early with your planning. In order to
maximize the Pre-Payment concept, be willing to start small at first and
get comfortable with the plan. Don't start too aggressively or let yourself
get discouraged. YOU CAN'T EAT THE ELEPHANT WHOLE. Take one bite at a
time... As you get started, you may soon find yourself looking for "things"
you can do without to bring more money into play to be used against the
principal. Start small, but DO GET SERIOUS about it if you're going to go
after your mortgage. Remember, the earlier money is applied, the greater
the impact, and the sooner it's over !!!!
By eliminating smaller debt obligations first, you'll have more money to
use against your home mortgage. Car loans are significant detractions. We
all seem to think we have to have new cars for some reason. Sorry - we
don't, especially when we've got a big home mortgage hanging over us. Maybe
we can get along with a good used car for a few years until our house is
paid for. You can always buy a new car later (if you still think you need
it). You may be suprised what you DON'T buy once you get into the habit of
it. Focus on debt elimination FIRST.
You'll probably be surprised to find out how rapidly you can increase your
Pre-Payments once you get started and once you see the results of your
actions. The printed model helps make it a concrete plan.
Good luck and happy tomorrows from the Mortgage Miser.