Business Assistant/Business Assistant.iso/home/financ10/readme.now

Text File | 1992-03-02 | 13KB | 302 lines

             ┌──────────────────────────────────────┐
             │           W E L C O M E              │
             │ Demonstration of Financing your Home │
             └──────────────────────────────────────┘

Welcome to Financing your Property, an easy to use program
for analyzing what is the best mortgage for you. All input is
through one screen. The results are shown on-screen.  During
the calculation process the screen will display the numbers
as they are changing.

In addition whenever you press the F1 key, a help message
will be displayed. The message is context sensitive to the
location of the cursor.

Several graphs are available to shown a trend in interest
rates for T-treasury bills, 11th district cost of funds and
annual price increase or decrease for home sales in the USA.

You can track your monthly payments to adjust for any added
principal payments during the life of the mortgage. All
detail is kept in a file, to be recalled at any time.

All loan calculations, including amortization, are presented
in accordance with established banking conventions.

Before working with Financing your Property, please read the
documentation. It is set-up as follows:

               > Program Features
               > Copyright notice
               > System requirements
               > Installation procedure
               > Set-up
               > Program Capacity
               > Menu structure


             ┌─────────────────────────────────┐
             │      Financing Your Home        │
             │  (c) 1991-1992 by Leonard Ansin │
             └─────────────────────────────────┘

This software is protected by both United States Copyright Law and
International Treaty provisions.

The Ansin Group and Leonard Ansin owns and retains all copyright, trade
secret, and other proprietary rights in the licensed software.


             ┌─────────────────────────────────┐
             │  Ansin Documentation Addendum   │
             │         Mar 2, 1992             │
             └─────────────────────────────────┘

         Financing Your Home Demonstartion Program
             (C) 1991-92 by The Ansin Group

If you need any assistance please contact The Ansin Group
at [phone] 48 Mechanic St., Newton, MA 02164

             ┌────────────────────────────────┐
             │      System Requirements       │
             └────────────────────────────────┘

The programs operate on all DOS machines with a hard disk, 540,000 bytes
of conventional memory, DOS 2.1 or later.

Before running the program, it is best to remove any terminate and stay
resident (TSR) programs, such as Sidekick.

             ┌────────────────────────────────────┐
             │        Program Installation        │
             └────────────────────────────────────┘

   A: is the floppy drive letter (SOURCE) and may be changed to meet
   your specifications.

   place the disk in the Disk Drive.

    Set the DOS prompt to the disk drive

    type FINANCE   and press [ENTER]

    Follow the on-screen promots

              ┌──────────────────────────────────────────┐
              │ Is it time to refinance your property !  │
              └──────────────────────────────────────────┘
Refinancing your existing home mortgage is the hot item for today's home-
owners and Mortgage rates are at the lowest in several years.  Lenders are
welcoming the ever increasing number of home owners who want to refinance
their property, but is it the best time to refinance your
home ?

Most refinancing applications want to replace their adjustable rate
mortgage (ARM) with a fixed-rate loan; depending on your circumstances,
this may not always be the case.  In recent years. ARM's have lost the
consumer's interest since the spread between the ARM and a Fixed rate
mortgage used to be at least 2 points; today. both mortgages starting rates
are nearly the same.

Luckily, there are a number of different types of fixed rate mortgages.  In
the interest of your pocketbook, you should contact as many lenders as
possible and get their rates, downpayment or loan to value ratio, fees and
what additional costs. At the time I wrote this Boston area rates ranged
from 7 3/4% on a 15 year loan with 4 points to 9% on a 30 year loan with
1/2 point.  As these numbers show, it is more important than ever to check
with as many lenders as possible.

Let's take a look at some of the rates that have caused the home mortgages
to decline dramatically. One-year Treasury Bills have dropped from 8% in
early 1990 to approximately 5 % today. It's very tempting to jump in and
say, "Refinance, now !"  By doing your homework and carefully analyzing
what's available, you can take full advantage of todays low rates.

Should you jump on the bandwagon? How low must rates go before it's time to
refinance.  If you can recoup your costs of refinancing within two years
and you plan to stay in the property for at least 3 to 4 years more, then
it's worth refinancing.

There are a number of reasons for refinancing--interest rates are not the
only thing to look at.  If your home has increased in value you could
refinance to draw out your equity. You may want to lock into lower fixed
rate mortgages if you now have an adjustable rate mortgage (ARM) or a
higher fixed rate mortgage or you may just want to refinance the present
mortgage balance at a lower rate.

Mortgages have changed and so have the questions that need to be asked.
Shopping for a mortgage used to be a relatively simple process; most home
mortgage loans had interest rates that did not change over the life of the
loan.  Today choosing among the many fixed rate mortgages means comparing
rates, monthly payment fees prepayment penalties and due-on-sale clauses.
To fully compare one loan with another, means knowing about indexes,
margins, discounts, caps, negative amortization, convertibility and
patience.

Let's look at some examples based on current market rates.
I gathered this information by calling a variety of Boston banks and
mortgage companies.  I then fed the numbers into the program called
"Financing Your Property: Is it Right for You?"

Let's say you have a $100,000 mortgage, currently paying 12%, you have made
payments for 5 years (60 payments at $1028.61 each) based on a 30 year
amortization table. The payments have been current and the principal
balance stands at $ 97,663. In this analysis we have used the old mortgage
balance of $97,663 as the new principal amount and have added points and
fees to the new principal amount.

Plan A:
Interest   Amortization  Points Monthly P & I  Total Interest

 8.50%        30 years   2.75%  $ 771.59       $ 177,425

It would take 10 to 11 months to payment the refinance expenses.

Plan B:
Interest   Amortization  Points Monthly P & I  Total Interest

 9.00%        30 years   0.50%  $ 789.75       $ 186,158

It would take 2 months to pay off the refinance expenses, but the total
interest charges over the life of the loan are nearly $10,000 higher that
Plan a:

Plan C:
Interest   Amortization  Points Monthly P & I  Total Interest

 8.125%       15 years   2.00%  $ 959.19       $ 73,037

 Since the new payment is only $69.43 lower than what you presently are
 paying, it would take about 28 months to pay off the refinance expenses.
 However, the total interest on the 15 year loan is only $73,037. The
 monthly payments are similar to the previous. With the 15-year schedule
 you would save anywhere from  $100,000 to $200,000 in interest.

Although tax deductions you receive for mortgage interest play an important
role in your decision recent tax changes have diminished their effect.
Mortgage interest deductions is only viable if the total deductions are
higher than your standard deduction. Again you have many options, but if
your adjusted gross income is below $100,000 and your other itemized
deductions exceed your standard deduction, you can estimate your tax
savings by multiplying your mortgage interest by your marginal tax rate.
You may w