Can I use this simple mortgage calculator as a loan modification calculator?
Simple Mortgage Calculator
It is very hard to find a single loan modification calculator to fit your needs for the complicated loan modifications because there are many ways to do the modifications. The basic ways of the loan modifications are
1. Write-down principal
2. Reduce interest rate
3. Re-amortize the mortgage terms to more years
4. Combination of Writing-down principal and reducing interest rate
5. Combination of Reducing interest rate and Re-amortization
6. Combination of re-amortization, interest rate reduction, and writing-down principal
If you can decide what kind of the loan modifications you want to do, things become much simpler. You can just use a simple mortgage calculator to get the job done. Following are some examples on how to use a simple mortgage calculator as a loan modification calculator.
Example 1. Write-down principal
This is very simple if you just want to reduce the principal and keep interest rate and term unchanged.
For example if your current loan balances is $300,000 with a fixed interest rate of 5.5% for 30 years and you wanted to ask your lender to reduce the principal by 10%. You want to know what the new monthly payment is. You also want to know how much principal you have to reduce in order to get down to $1,300 which is you monthly affordable payment. Here is how you can do it:
1. Get the amount of the loan reduction: $300,000 X 10% = $30,000;
2. Get the amount of the new amount: $300,000 - $30,000 =$270,000;
3. In following simple mortgage calculator enter
- The new loan amount ($270,000) for the "Home Price" as the principal
- 5.5 for the "Interest Rate"
- 30 for the term “Years"
- 0 for the "Down Payment"
4. Then you get your monthly payment, that is, $1,533.03 in this example.
5. Just change the number in the "Home Price" until you see the number in the "Monthly Payment' at the bottom becomes $1,300. The amount in the "Home Price" box is the new loan amount you can afford. In this example, it is $228,959.
Simple Mortgage Calculator
Example 2. Reduce interest rate
For example if your current loan balances is $300,000 with a fixed interest rate of 7.5% for 30 years and you want to at what interest rate you can get your monthly payment to $1,350. Here is how you can do it:
In following simple mortgage calculator enter
1. The loan amount ($300,000) for the "Home Price" as the principal
2. 7.5 for interest rate
3. 30 for the term “Years"
4. 0 for the "Down Payment"
5. Then you get your monthly payment before the interest rate reduction, that is, $2,097.64 in this example.
6. Now, just change the number in the "Interest Rate” box until you see the number in the "Monthly Payment' at the bottom becomes $1,350. The amount in the "Interest Rate" box is the new loan amount you can afford. In this example, it is about 3.5%.
Simple Mortgage Calculator
Example 3. Re-amortize the mortgage terms to more years
For example if your current loan balance is $300,000 with a fixed interest rate of 5.5% for 30 years and you want to know how much monthly payment reduction you can get if your loan is re-amortized to a 40 years term. Here is how you can do it:
In following simple mortgage calculator enter
1. The loan amount ($300,000) for the "Home Price" as the principal
2. 5.5 for interest rate
3. 30 for the term “Years"
4. 0 for the "Down Payment"
5. Then you get your monthly payment before the interest rate reduction, that is, $1,703.37 in this example. You can write down this number in a piece of paper.
6. Now, you can change "year" to 40 years, your new monthly mortgage payment is $1,547.31. So you know you get a reduction for about $150 per month.
Simple Mortgage Calculator
Now, you under stand the basic, you can easily do the calculations for the following combination.
For the combination of Writing-down principal and Reducing interest rate - just change the number of the principal both and the interest rate to get your desire the monthly payment.
For the combination of Reducing interest rate and Re-amortization - just change the number of years and the interest rate to get your desire the monthly payment.
For the combination of re-amortization, interest rate reduction, and writing-down principal - just change, principal, the number of years, and the interest rate to get your desire the monthly payment.
Hope this can help you.
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