Homebuyers using the tool need to feed in the term, interest rate & loan amount. It also requires annual/monthly figures regarding the property's homebuyer insurance payment and the property tax involved. With these figures as the input, the tool can provide detailed annual/monthly amortization schedules.
Without this tool, getting the schedule would be a difficult matter where math Factors are involved. These factors are the loan payments required for every $1000 of the proposal value. It will depend on the interest rate & the term of the proposal.
Let's consider a specific example to show how difficult it can get when doing it manually sans a mortgage calculator with PITI. Assume the loan amount is $250,000 and the homebuyer is looking at a 5% interest rate proposal with a term of 15 or 30 years. The calculations start by referring to a factor chart, which shows that the factor for this proposal can be either 5.37 or 7.91 for 30 & 15 year terms, respectively.
The homebuyer then has to multiply this factor by 250 (since it is a $250,000 proposal), which provides a per $1000 loan amount payment of either $1977.50 or $1342.50 (for a term of 15 or 30 years, respectively). For those who have no inclination for these calculations, the best solution is to simply use the home loan calculator with taxes and insurance figures as input, plus of course the amount, interest and term.
One other thing to note is that this tool works for FHA loans too, so homebuyers are advised to do a comparison of FHA vs conventional proposals. The point here is that FHA provides insurance so the lender carries less risk and offers better terms. Homebuyers without good enough credit can qualify for proposals that they couldn't normally get without the FHA's backing.
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