Fixed-adjustable loan with expected annualized interest rate.
Doug Perry, the first vice president of Countrywide Home Loans, said, "One of the most common forms of mortgage refinancing is the mortgage with fixed and adjustable expected annualized interest rate." The initial expected annualized interest rate of this kind of loan is fixed-this period may be 3 years, 5 years or 7 years, and the expected annualized interest rate thereafter is adjusted regularly according to the market level.
At Countrywide, the "3-1" fixed-adjustable features interest rates in the "low fives," he said.
The expected annualized interest rate of the national "3-1" fixed adjustable expected annualized interest rate loan is between 5% and 5.5%.
Keith Gumbinger, vice president of financial publisher HSH Associates, said that the risk of this kind of mortgage loan is that the expected annualized interest rate level may rise significantly after the fixed expected annualized interest rate period ends. "The money you saved in the first five years may be wiped out in one year."
However, the mortgage loan with fixed and adjustable expected annualized interest rate is very suitable for those families whose repayment schedule is 5 to 7 years.
The interest of 5/25 and 7/23 mortgage loans is fixed for the first five or seven years, and the remaining loans are calculated at market interest once after this period. Although there is little difference between the fixed expected annualized interest rate and the adjustable expected annualized interest rate, it is still very suitable for people who change jobs frequently.
15-year fixed expected annualized interest rate loan
The 15-year mortgage with fixed expected annualized interest rate is particularly attractive to those who want to hold shares and pay off the loan as soon as possible. This kind of mortgage is particularly popular in New England and new york, where families usually hold shares for a longer period of time.
Interest-only loans
Many people regard this kind of loan as a supplementary way to the refinancing plan.
Patrick McErnerney, president of Priceline Mortgage, said, "This may be one of the most attractive mortgage products, but it doesn’t seem to arouse public interest." For example, a loan of $200,000 from Priceline Company will be paid in monthly installments of $1,083 for the first five years, while the standard loan principal plus interest will be $1,231 per month.
Of course, the installment payment may increase after the end of the initial expected annualized interest rate period, but some people may want to be more relaxed in hand in the short term and repay the principal later.
Wells Fargo Home Mortgage also has an interest-only mortgage project called "Super Jumbo".
For mortgage loans with a loan amount of more than $275,000, the fixed expected annualized interest rate is 1% lower than the basic expected annualized interest rate, and the maximum is not more than 5.49%. The fixed expected annualized interest rate is 10 years.
Customers who use this kind of mortgage loan think that the expected annualized interest rate will not rise in a certain period of time.
How to calculate mortgage interest?
Example: Mr. Li has a house of his own, with a total price of about 200,000 yuan. He wants to use this house for mortgage loan. The loan is 140,000 yuan, and the repayment period is 10 years. Mr. Li asked how much the mortgage interest is and how much it needs to be repaid every month.
First of all, the bank stipulates that the repayment methods of mortgage loans are equal principal and interest repayment and average capital repayment respectively.
Matching principal and interest means repaying the same amount of loans (including principal and interest) every month during the repayment period.
The calculation formula of monthly repayment amount is as follows:
[Loan principal × monthly expected annualized interest rate × (1+monthly expected annualized interest rate) repayment months] ÷ [(1+monthly expected annualized interest rate) repayment months-1]
In average capital, the total amount of loans is divided into equal parts during the repayment period, and the same amount of principal and the interest generated by the remaining loans in that month are repaid every month. In this way, because the monthly repayment amount is fixed and the interest is getting less and less, the lenders are under great repayment pressure at first, but the monthly repayment amount is getting less and less as time goes by.
Average capital loan calculation formula is as follows:
Monthly repayment amount = (loan principal/repayment months)+(principal-accumulated amount of repaid principal) × monthly expected annualized interest rate.
If the interest of Mr. Li’s mortgage loan in the example is calculated at 5.94% according to the expected annualized interest rate of the loan for more than five years. If you choose the equal principal and interest method, you will pay the principal and interest of 1,550.0721 yuan per month, and the accumulated interest will be 46,008.65 yuan, and the accumulated repayment amount will be 186,008.65 yuan. If average capital method is selected, the monthly principal will be the same as 140,000/120 = 1,166.66 yuan, and the interest will decrease, so will the monthly payment. Accumulated interest payment is 41,926.5 yuan. The accumulated repayment amount is 181,926.5 yuan. From this, we can see that the total interest in average capital has decreased relative to the equal principal and interest, but at the beginning, the repayment pressure was great. If it is used for mortgage, this method is more suitable for people who are at the peak of their work or who are retired.
According to the example, we have a preliminary understanding of the calculation method of mortgage interest. In the actual mortgage loan, customers can choose a more cost-effective mortgage loan by comparing the mortgage interest according to the relevant regulations of major banks.