FV - future value (or maturity value) PV - principal or present value i - interest rate per period N - number of periods
Simple Interest
I = PV * i * N
PV - principal or present value i - interest rate per period N - number of periods
Compound Interest Future Value
FV = PV * ( 1 + i )N
PV = present value FV = future value (maturity value) i = interest rate in percent per period N = number of periods
Compounded Interest
i = FV - PV
PV = present value FV = future value (maturity value) i = interest rate in percent per period
Annuity
FV = PMT * [ ( ( 1 + i )N - 1 ) / i ]
FV = future value (maturity value) PMT = payment per period i = interest rate in percent per period N = number of periods
Simple Interest Amortized Loan Formula
PV * ( 1 + i )N = PMT * [ ( 1 + i )N - 1 ] / i
PMT = the payment per period i = interest rate in percent per period PV = loan / mortgage amount N = number of periods
A little about selecting a mortgage company.
By Earl L. Huse JD
It has been said by many philosophers, authorities, and individuals well versed in investment matters, that everything we have in this world comes from the earth. Just think about it for a moment and you will agree.
Being the Best of the Best in the Mortgage industry is not easy, it requires many elements to success and one key factor to success is the loan officers. They must be professionals. The cannot be the “want-to-be" loan officers who only work part time, once or twice a week and expect the same privileges as the hard working professional. There are a lot of the want-to-be loan officers and there are a lot of mortgage companies who will hire them because they feel the more loan officers they have, the more loan that will close. This is not always the case. Most of the time loans are lost because the want-to-be loan officers demand so much time from processors, underwriters and management that they cannot function properly and cannot close the important loans that are the “bread and butter" business of a mortgage company.
With thousands upon thousands of mortgage companies, financial institutions and other lending groups throughout the United States, competition is sometimes quite fierce. Each company has an average of 6 loan officers and they are all competing for one thing, LOANS. Where do these loans come from?
A good portion of them comes from the real estate agents who give business to the loan officer because of several factors:
4. Quick approval decisions 5. Best interest rates available While other loans are generated through various news media, new builder developments, and most are from referrals of past clients, the above factors play the same role. The professional loan officer knows he “works" for you and as a result, is constantly striving to be the best of the best.
New mortgage companies and financial institutes seem to open up every day in various parts of the country and unfortunately only a few survive. What does it take for a new company to break into the marketplace and generate business?
4. Quick approval decisions 5. Better interest rates then competition 6. Less closing costs to the borrower because less costs means more buying power 7. Promotions within real estate offices i.e.: What is meant by better interest rates then those of competition? If competition is at 7% with a .50 rebate, and 1% origination fee, (working off of wholesale rates) then better is working off of correspondent rates where 6.875% will afford a .50 rebate.
If competitive pricing (the best of the best rates) is not made available to the consumers through the real estate agents, then a mortgage company is just another mortgage company competing for the same thing, the borrower, and the loan officer is only relying on his or her personality to generate business. It is understood that the best of the best rates and the quickness of competition is not always available to the "B" borrower, but when the borrower is an "A" borrower, this is a different story.
A new mortgage company must learn to be a leader, not a follower in the industry. To offer just service is not the answer, everyone offers service (or claims they do) but none offer the best of the best rates because mortgage companies want to capitalize on maximum profits on each loan, but those companies overlook one key thing, without loans, they have no business. Without loan officers, there is no business. Take away the opportunity for loan officers to have the best of the best rates available to them and they are just another broker, not a banker.
It is a misconception by real estate agents and the consumer that assume a mortgage banker VS a mortgage broker is that a banker offers better interest rates. It is true however, the misconception can be construed, as it should be meant, BE BETTER THAN COMPETITION by offering the interest rates that the agents and consumers have the conception a mortgage banker is.
A mortgage company/banker does not have to be the same as EVERYONE else in the industry. It can be better, it can be profitable, it can be exciting, it can be adventurous, and it can be a place that will be a place loan officers want to work at. A place loan officers will flock to. But this company needs to be restructured in order to survive the mess it is in and needs to understand what competition is really all about.
Competition is not just about having the same thing everyone else has, it is about being different, being better, not just a little better, but being a lot different and better.
