Quest for knowledge
Today I’d like some input.
Lately, websites with mortgage calculators have been scrutinized by yours truly. More less they all serve the same function and pretty much all spit out the same number.
What struck me as curious was the completely lack of a 2nd mortgage. It is possible people can put down enough money to have a single mortgage. Personally I know of none. Everyone is financed as either some kind of 80/10/10 or 3% down or 5% down. All those mortgages have a second mortgage attached to them. Usually with 2nd mortgages, the interest rate is higher and therefore doesn’t exactly match a simple large mortgage calculation.
As an experiment, I ran a bunch of numbers through a spreadsheet to find out how gross this error would be. The results are relatively minor.
| Mortgaged Amount | 1 Mortgage | 1st and 2nd Mort. | Difference |
| $175000 | $1224 | $1274 | $50 |
| $300000 | $2,098 | $2,183 | $86 |
| $500000 | $3,496 | $3,639 | $143 |
At $500,000, the difference between the two is $143. This is about 4%. As an engineer, I can say the number is “close enough” and move on. But there are finance people out there who may disagree with me.
I put together a poll. Please take a second and tell me which option you would prefer. Is precision the name of the game or is the free calculator online enough for a rough idea?
hmmm I thought it was 20% down now in the US or no mortgage?
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I would think that people calculate their mortgages one at a time and then add up the two payments.
I always calculate the blended rate.
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@mOOm: Oh no they still offer all kinds of various loan programs. The only one I heard of being phased out is the 100% down program. The difference today is the lower the down payment, the higher the credit score must be. And because all lenders are doing strictly FHA loans, they are going “full doc”. In otherwords, no more “stated income” documents are being done. Verify everything.
@Kenric: I agree on using the blended rate. The problem is you can’t program that into a website. If I verified the loan payment on a website which did a “blended” rate behinds the scenes, the numbers would be off. I would probably never use that site again.
Two mortgages, calculated separately on a 24 year old HP 12-C. Never failed me yet!
To get the blended rate, don’t you just type in the amount of the first loan, calculate it. Then type in the amount of the second loan, calculate it. Then add the two payments together.
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