Reverse loan calculator is a general term and it can be explained in general terms only. There are various types of loans in the financial market and each has their own specialties and peculiarities. There are practical as many reverse loan calculators as there are loans. A loan has many variables. A principal is the loan amount of money one needs to get for what so ever needs. A loan comes with an interest. Interest is the lender’s income out which he has to manage his various expenses and earn a return on the money he invests. This is normally a percentage of the principal and is expressed as a percent per year. It can be compound or simple, generally simple in most cases. Compounding means the interest accrued in the first year is added to the capital and one pays interest on the augmented capital. Interest can be compounded by any frequency like daily, monthly, quarterly, half-yearly or yearly. A loan has a time period within which it is to be repaid in total including the interest. This period is called the term of the loan. At the end of the period, one pays the principal and the interest accrued over the term of the loan and is called Total Payment amount. Out of the four variables, one feeds three the reverse loan calculator will calculate the forth. Each loan has its specialties and these are incorporated in these reverse loan calculators. One comes across reverse mortgage calculator, auto loan reverse calculator and so on.
Reverse loan calculator, for example,e can calculate any one of these if the other items are fed in – loan amount, loan terms in months, monthly installment amount. Once these amounts are fed in, it would calculate the interest rate. Like that any three information are given the forth will be calculated.
An annuity is more complex. There is something called annuity ratio which plays a decisive role in calculating annuity payment. The amount of monthly installment is the product of credit amount by annuity ratio which is calculated using different formulae by different companies. Hence the information given by a reverse loan calculator would not be accurate and is only indicative. The variables in the annuity calculators are Interest Rates, Loan Term, Loan Amount, Monthly Installment, Total Payment, Total Interest paid. Fill any five of the six and sixth will be calculated.
A reverse mortgage calculator is slightly complex. There are various expenses that are arrived at after complicated calculation. That per se is not a problem. They are based on various market indices. Different companies use different indices and interest rates, hence the accuracy of the calculator with respect to any specific company depends on the indices and interest rates assumed in the calculator and used by the company. Most companies have their own calculators and are usually available for use by applicants. Their results would be fairly accurate with respect to that company. The results are, as a rule, rough estimates only. The reverse mortgage calculator has the variables, Home Value, Down payment, Loan amount, Interest rate, Mortgage term, Beginning date, Private Mortgage Insurance (PMI monthly amount) and Yearly Taxes, Amortization Table with annuity payment and fixed principal. The amortization table also shows in table form the Year, Month, Payment, Interest, Principal, Balance (outgoing), Tax amount and PMI amount. Another complication in reverse mortgage is that it has the longest coverage. The property undergoes depreciation which reduces the value of the property.
Auto Loan Calculator helps one to calculate and print out the schedule of payment and compared with different credit terms. The input needs are the Auto Price, Interest Rates Loan Term, and Trade in Value. With these inputs, one can calculate the repayment rates using the annuity repayment mode. After calculations, the calculator allows one to draw out the repayment schedule which if required can be printed out. This can be used to compare with various terms of credit. With these inputs, it will calculate Monthly Payment, Total Payment, and Total Interest paid. Once these calculations are finished the button for loan scheduling pops up and one can get the repayment schedule if required.
Early Loan Repayment Calculator helps one to assess the impact of increasing the repayment amount. The calculator first calculates the monthly repayment amount as per the original scheme of repayment. This is done in the first section of the machine. In the second one feeds in the increased repayment amount and the calculator calculates the new interest amount. Then one can compare the total amounts between the original and the enhanced rate of repayment. Of course, one has other factors to consider before enhancing the repayment amount as some lenders would be levying a penalty for early closure of the loan. Some lenders allow the early closure with a payment of additional commission to them.
There are very many products on the market and specific to a particular loan. One could whatever suits them best.
