3420 UG CVR 7/6/04 1:57 PM Page 1 CANADIAN QUALIFIER PLUS IIIX ® PROFESSIOINAL RESIDENTIAL REAL ESTATE FINANCE CALCULATOR with BUILT-IN CANADIAN INTEREST MODE Model 3420 User’s Guide
3420UG-E-A 7/2/04 9:06 AM Page 1 Introducing the CANADIAN QUALIFIER PLUS® IIIX Mortgage Calculator The Canadian Qualifier Plus IIIx was designed specifically for mortgage lenders, residential real estate agents and brokers for quick mortgage calculations in the office or out in the field. It’s the most complete and intuitive calculator of its kind.
420UG-E-A 7/2/04 9:06 AM Page 2 TABLE OF CONTENTS GETTING STARTED ..........................................................................6 KEY DEFINITIONS .........................................................................6 Basic Operation Keys ..................................................................6 Mortgage/Time-Value-of-Money Keys..........................................7 Qualifying Keys ..........................................................................10 U.S.
3420UG-E-A 7/2/04 9:06 AM Page 3 Setting Property Tax $................................................................32 PITH Payment (Including Heating Expense) .............................32 PITH Payment (Including Heating Expense and Property Tax Entered as %) .........................................................................33 PITH Payment (Including Heating Expense and Property Tax Entered as $) ..........................................................................
3420UG-E-A 7/2/04 9:06 AM Page 4 EXAMPLES — U.S. MODE .............................................................54 Finding the Monthly Loan Payment (Based on U.S. Interest Rate) .......................................................................................54 Property Taxes, Property/Hazard Insurance and Monthly Housing Expense....................................................................55 PITI Payment (Tax and Insurance Entered as %) .....................
3420UG-E-A 7/2/04 9:06 AM Page 5 Warranty.....................................................................................77 Legal Notes................................................................................78 Looking For New Ideas..............................................................78 INDEX .............................................................................................
3420UG-E-A 7/2/04 9:06 AM Page 6 GETTING STARTED KEY DEFINITIONS Basic Operation Keys O Turns all power off. The memory and most financial registers are cleared. o If calculator is off, turns power on. If calculator is on, a single press clears the last entry while a second press in succession clears non-permanent entries. +–x ÷= Arithmetic operation keys. 0–9 Keys used for entering numbers. ) Triple-zero key (saves time when entering 000 values).
3420UG-E-A 7/2/04 sx 9:06 AM Page 7 Clear All — Clears all entered values and returns any stored values to their default settings. Use this only with caution, as it will reset ratios, periods per year, etc. back to their defaults (see the Appendix for a list of these settings). Note: Clear All will not affect any changes made to Preference Settings (with the exception of Payments/Year and Decimal Places, which are returned to their defaults), unless you perform a Reset (see page 74).
3420UG-E-A 7/2/04 T 9:06 AM Page 8 Enters or solves for the number of years. Second press gives the number of periods. An entered term greater than 45 will be classified as periodic, not annual. Note: Stored permanently, until you change it or perform a Clear All (s x). You may enter a periodic term, if you prefer, by pressing the π key prior to pressing T (e.g., 3 0 0 π T instead of 2 5 T). ˆ Interest — Enters or solves for the annual interest rate. Second press gives the periodic rate.
3420UG-E-A 7/2/04 s÷ 9:06 AM Page 9 Payments per Year — Used to set the number of payment periods per year. Default value is 12, for monthly. Note: You can store the number of payments/year permanently or semi-permanently. See “Preference Settings” on page 17). a Amortization (Amort) — Finds Total Interest, Principal, Remaining Balance, Remaining Term and (when in U.S. Mode only) estimated Mortgage Interest Tax deduction.
3420UG-E-A 7/2/04 9:06 AM Page 10 s: Odd-Days Interest — Calculates the pre-paid interest, or simple interest accumulated (based on a 360-day year) during the days before the first mortgage payment is made, using the interest rate stored in the Interest register. sT Bi-Weekly (Bi-Wkly) — Converts a regular monthly loan to a Bi-Weekly loan, where the buyer may realize significant interest savings. After loan variables are entered, pressing s T displays the reduction in term.
3420UG-E-A 7/2/04 9:06 AM Page 11 (Cont’d) 1) Stores Canadian GDS:TDS ratios for mortgage qualifying. Entered ratios are separated by the Colon : key. For example, income and debt ratios of 32% and 40%, respectively, are entered and permanently stored as follows: 3 2 : 4 0 q. Default income and debt ratios for this key are 32% and 40%, respectively. You may change these ratios, if desired.
3420UG-E-A 7/2/04 9:06 AM Page 12 (Cont’d) Note: This restricted/unrestricted qualifying mortgage comparison is useful to show clients what size loan they could qualify for if they paid off debt or increased income.
3420UG-E-A 7/2/04 t 9:06 AM Page 13 Property Tax — Used for calculating PITI and Total (PITH) payment, and Qualifying. Stores estimated annual property tax in either percent or dollar amount. If entered as an annual dollar amount, a press of t converts to the monthly tax amount, and pressing t again converts to the annual percentage rate. If entered as a percentage, pressing t converts to the annual dollar amount, and pressing t once more shows the monthly tax.
3420UG-E-A 7/2/04 sp 9:06 AM Page 14 Estimated Income Tax Savings (Tax Svgs) — Calculates an estimated annual income tax savings for a mortgage, based on entered loan variables, including property tax, mortgage interest, and tax bracket. You must enter a tax bracket, then press s p p to display the estimated annual income tax savings; the third consecutive press of p will display the monthly tax savings; and the fourth press will display the estimated “after-tax”, or net mortgage payment.
3420UG-E-A 7/2/04 9:06 AM Page 15 CALCULATOR SETTINGS Decimal Place Selection With the s key, you have the option of selecting the number of decimal places you’d like to display. The values are rounded using conventional 5/4 rounding. You can do this prior to finding an answer or afterwards. Press s followed by the number of decimal places you wish to display: s s s s s s s s 6 5 4 3 2 1 0 • 0.000000 0.00000 0.0000 0.000 0.00 0.0 0.
3420UG-E-A 7/2/04 9:06 AM Page 16 Canadian / U.S. Mode Your calculator is factory-set to Canadian (Interest) Mode. If you need to calculate loan problems using U.S. interest, you must change the calculator to U.S. (Interest) Mode. To easily switch your calculator from Canadian Mode to U.S. Mode, press the s and then the 9 key. Pressing s 9 also allows you to toggle between Canadian Interest and U.S. Interest calculations. In other words, you may switch from Canadian Interest to U.S.
3420UG-E-A 7/2/04 9:06 AM Page 17 Preference Settings Your calculator has a Preference Mode, which allows you to program the calculator to various settings. For example, it allows you to store certain values permanently, display certain values, or show values in a specific order. To access the Preference Mode, press s, then =, then keep pressing = to toggle through the settings listed below. Press the + sign to advance through the sub-settings.
3420UG-E-A 7/2/04 9:06 AM Page 18 (Cont’d) After s, Keep Pressing =: Display Description (Press + to Advance within each category): 4 Mortgage Insurance (MI)—U.S. Only - Clr-Clr M Ins — Clears Mortgage Insurance (% and $) upon o o. (Default) - Clr-OFF M Ins — Clears Mortgage Insurance (% and $) at O. - HOLD Pct. M Ins — Holds only percent (%) Mortgage Insurance entry at O. - HOLD ALL M Ins — Holds (% or $) Mortgage Insurance entry at O.
3420UG-E-A 7/2/04 9:06 AM Page 19 MEMORY Accumulative Memory µ Whenever the µ key is pressed, the displayed value will be added to cumulative Memory. This value will remain in Memory until cleared or when the calculator is turned off.
3420UG-E-A 7/2/04 9:06 AM Page 20 Memory Storage Keys (M0-M6) In addition to the standard cumulative Memory (as described above), your calculator has six independent Storage Registers — [M0] through [M6] — that can be used to permanently store single, noncumulative values. These values will be held when your calculator is turned off, and will only clear when a “Clear All” is performed (via s x). You can replace a value in one of these Memory Registers by storing a new value in place of the stored value.
3420UG-E-A 7/2/04 9:06 AM Page 21 Additional Memory Storage Keys (M10-M19) In addition to M0-M6 (as described previously), your calculator has ten additional independent Storage Registers — [M10] through [M19] — that can also be used to permanently store single, noncumulative values. To access these storage registers, use the following keystrokes: s ® • [#], with [#] being digits 0 – 9. These Storage Registers operate identically to M0-M5. Examples: Store 250 into M10 and recall the value.
3420UG-E-A 7/2/04 9:06 AM Page 22 BASIC ARITHMETIC EXAMPLES Arithmetic This calculator uses standard chaining logic, which simply means that you enter your first value, the operator (+, –, x, ÷), the second value and then the equals sign (=). A. B. C. D. 3 3 3 3 + – x ÷ 2 2 2 2 = = = = 5.00 1.00 6.00 1.50 Percentage Calculations The Percent % key can be used for finding a given percent of a number or for working add-on, discount or division percentage calculations. A. B. C. D.
3420UG-E-A 7/2/04 9:06 AM Page 23 Figuring Straight % Commission The commission for the listing office is 3%. If the property sells for $157,900, what is the listing office’s commission? STEPS KEYSTROKES Clear calculator Enter sales price Multiply by commission % oo 157900 x3%= DISPLAY 0.00 157,900. 4,737.
3420UG-E-A 7/2/04 9:06 AM Page 24 USING THE DATE FUNCTION Using the : key, you can quickly solve common real estate date problems: escrow or closing dates, listing expiration dates, and the number of days prepaid interest, etc. You enter a date as follows: Numerical Month :, Numerical Day :, and Numerical Year.
3420UG-E-A 7/2/04 9:06 AM Page 25 EXAMPLES — CANADIAN MODE MORTGAGE / TIME-VALUE-OF-MONEY (TVM) 1. The financial functions — Mortgage Amount, Payment, Interest, Term — work just like you would say them. For example, if you wanted to borrow $100,000 for 25 years at 8% interest, just enter those three known variables and press the key for the unknown fourth variable: Payment p. 2. When calculating future value problems, enter the present value into the l key. 3.
3420UG-E-A 7/2/04 9:06 AM Page 26 (Cont’d) IMPORTANT NOTE: All of the following examples can also be performed while the calculator is in U.S. Mode. See Canadian/U.S. Modes on page 16. Just be sure to change the term from 25 to 30 years, where applicable, and of course, the answers will change due to U.S. interest. Additional U.S. examples are provided starting on page 54. Finding the Monthly Mortgage Payment Find the monthly payment on a 25-year fixed-rate mortgage of $165,000 at 7.5% annual interest.
3420UG-E-A 7/2/04 9:06 AM Page 27 Paying Off a Mortgage Early (Making Larger Payments) How long does it take to pay off a 25-year fixed-rate mortgage of $150,000 at 7.25% interest if you add an extra $200 to the mortgage payment each month? STEPS KEYSTROKES Clear calculator Enter Mortgage Amount Enter Interest Enter Term Find P&I monthly Payment Add add’tl Payment amount Store as Payment Find reduced Term oo 150)l 7•25ˆ 25T p +200= p T DISPLAY 0.00 150,000.00 7.25 25.00 1,073.88 1,273.88 1,273.
3420UG-E-A 7/2/04 9:06 AM Page 28 Finding the Mortgage Amount Approximately how much could you borrow if the interest rate was 7.8% on a 25-year mortgage, and you could afford $1,500 in monthly payments? What if the interest rate was lowered to 7.5%? STEPS KEYSTROKES Clear calculator oo Enter Interest 7•8ˆ Enter Term 25T Enter monthly P&I Payment 1 5 0 0 p Find Mortgage l Enter new Interest rate 7•5ˆ Find new Mortgage l DISPLAY 0.00 7.80 25.00 1,500.00 “run” 199,869.55 7.50 “run” 205,042.
3420UG-E-A 7/2/04 9:06 AM Page 29 Finding a Quarterly Payment Find the quarterly payment on a 10-year loan of $15,000 with an annual interest rate of 12%. STEPS KEYSTROKES Clear calculator Set to 4 Payments/year Enter Loan Amount Enter Term in years Enter annual Interest Find quarterly P&I Payment Reset to 12 Payments/year oo 4s÷ 15)l 10T 12ˆ p 12s÷ DISPLAY 0.00 4.00 15,000.00 10.00 12.00 “run” 644.36 “run” 12.
3420UG-E-A 7/2/04 9:06 AM Page 30 Bi-Weekly Term Reduction and Payment Find the monthly payment on a 25-year, $198,500 loan at 7.85% annual interest. Then convert it to a Bi-Weekly and find out how many years it will take to pay off this loan, the total interest savings, total payments and the Bi-Weekly payment.
3420UG-E-A 7/2/04 9:06 AM Page 31 Finding Mortgage Amount Based on Sales Price and Down Payment Find both the down payment dollar amount and mortgage amount if the sales price is $175,800 and you're planning to put 10% down. STEPS KEYSTROKES DISPLAY Clear calculator Enter sales Price Enter Down Payment % Find Down Payment $ Find Mortgage Amount oo 175800P 10d d l 0.00 175,800.00 10.00 17,580.00 158,220.
3420UG-E-A 7/2/04 9:06 AM Page 32 Setting Property Tax % Rate Enter an annual property tax rate of 1.5% STEPS KEYSTROKES Set Tax rate Clear display Recall Tax rate 1•5t oo ®t DISPLAY 1.50 0.00 1.50 Setting Property Tax $ Enter annual property taxes estimated at $2,500, then clear. STEPS KEYSTROKES Set annual Taxes Clear Tax 2500t 0t DISPLAY 2,500.00 0.00 PITH Payment (Including Heating Expense) Find the PITH payment on a 25-year, 7.
20UG-E-A 7/2/04 9:06 AM Page 33 PITH Payment (Including Heating Expense and Property Tax Entered as %) Find the PITH payment on a 25-year, 7.63% mortgage if the home’s selling price is $178,000 and the down payment is 5%. The annual property tax is estimated at 1.3% and the monthly heating cost is estimated at $150. STEPS KEYSTROKES Clear calculator Enter Term in years Enter annual Interest Enter sales Price Enter Down Payment Set annual Tax rate Find annual property Taxes Add mo.
3420UG-E-A 7/2/04 9:06 AM Page 34 PITH Payment (Including Heating Expense and Property Tax Entered as $) Find the PITH payment on a 25-year, 7.25% mortgage if the home’s selling price is $227,000 and the down payment is 35%. Local annual property tax is estimated at $2,270 (or 1% of the sales price). Monthly heating expense is $100. STEPS KEYSTROKES Clear calculator Enter Term in years Enter annual Interest Enter sales Price Enter Down Payment % Find dollar $ Set Tax figure Add mo.
3420UG-E-A 7/2/04 9:06 AM Page 35 Amortization and Remaining Balance The amortization function is quick and simple. It allows you to find total Interest, Principal, and Remaining Balance for an entire mortgage, for an individual payment or individual year, or any range of payments or range of years, for fully or partially amortized mortgages. Notes on Amortization 1.
3420UG-E-A 7/2/04 9:06 AM Page 36 (Cont’d) Note: If you have changed your Month Offset, be sure to return it to 1 (i.e., 1 s )) before proceeding to the next problem. 7. (U.S. Mode Only) A useful new feature is that your calculator will also display an estimated Mortgage Interest Tax Deduction at the end of the amortization value list (after remaining balance is displayed), if a tax bracket is also entered via s + (Tax Brkt%).
3420UG-E-A 7/2/04 9:06 AM Page 37 Amortization List for Individual Year(s) — Using “Next” Feature How much total interest and principal will you pay on a 25-year, $90,000 mortgage at 8% interest during the first year? The second year? Third year, etc.? First, find monthly payment to “set-up” this mortgage. The calculator will automatically advance to the next year upon subsequent presses of a.
3420UG-E-A 7/2/04 9:06 AM Page 38 Amortization List for Individual Year(s) — Using Month Offset The first payment of a mortgage begins in May. How much total interest and principal will you pay on a 25-year, $90,000 mortgage at 8% interest during the first year? The second year? Third year, etc.? (First find monthly payment to “set-up” this mortgage.
3420UG-E-A 7/2/04 9:06 AM Page 39 Amortization List for Individual Payment(s) For a $175,000 mortgage at 6.85% interest for 25 years, find out how much interest and how much principal you’ll pay in the first and second payments. Note: Use the π key to label the payments. STEPS KEYSTROKES Clear calculator Enter Mortgage Amount Enter Interest Enter Term Find monthly P&I Payment Enter Payment #1 Find Interest in Pmt #1 Find Principal in Pmt #1 Find Prin./Int. in Pmt #1 Find Rem. Bal. in Pmt #1 Find Rem.
3420UG-E-A 7/2/04 9:06 AM Page 40 Amortization List for a Range of Payments or Years For a $225,000, 25-year mortgage at 7.4% interest, find out how much interest and principal you'll pay in payments 1-9, and then for years 1-10.
3420UG-E-A 7/2/04 9:06 AM Page 41 Future Value Given any four components to a problem that includes a future value, you can calculate the fifth. Appreciation / Future Value You purchased a home for $210,000 and want to know what it will be worth in 3 years, figuring an inflation or appreciation rate of 6%. (Set periods to one per year.
3420UG-E-A 7/2/04 9:06 AM Page 42 Trust Deeds and Discounted Notes Your calculator easily handles trust deed purchase price and yield problems. Two things to remember are: 1) when entering or solving for “yield” or “rate of return,” use the ˆ key, and 2) when entering or solving for “purchase price” or “present value,” use the l key.
3420UG-E-A 7/2/04 9:06 AM Page 43 Finding the Yield on a Discounted Note An individual wants to sell you a note under the following terms: 60 months remaining in the term, a face amount when due of $7,500, 10% interest-only payments of $62.50 (incoming). He says he will sell this note to you for $6,500 if you buy today.
3420UG-E-A 7/2/04 9:06 AM Page 44 BUYER PRE-QUALIFYING The Qualifying keys on your calculator let you instantly pre-qualify prospective buyers. Mortgage lending pros will find these keys useful for doing instant mortgage pre-qualifications on the phone or in front of clients. Real estate agents/brokers can quickly pre-qualify clients so they can show them homes in their affordable price range.
3420UG-E-A 7/2/04 9:06 AM Page 45 (Cont’d) • • the fourth press will display the higher, “unrestricted” qualifying mortgage amount (for comparison purposes); and the last press will display the allowable monthly debt. Note: You can set your Qualifying Ratios to display first or last via the Preference Settings. See page 17. 5.
3420UG-E-A 7/2/04 9:06 AM Page 46 QUALIFYING EXAMPLES Most of the examples in this section will be based on the default GDS:TDS Income and Debt Ratios of 32% and 40%, respectively, which are stored in the q key. Recalling GDS / TDS Qualifying Ratios Recall stored 32%-40% and 35%-42% ratios: STEPS KEYSTROKES Clear calculator Recall Qualifying Ratios 1 Recall Qualifying Ratios 2 oo ®q ®Q DISPLAY 0.00 32.00-40.00 35.00-42.
3420UG-E-A 7/2/04 9:06 AM Page 47 Finding Qualifying Mortgage Amount and Sales Price (Simple Example Excluding Property Tax) Given an interest rate of 7.5%, a term of 25 years, and the stored 32%:40% qualifying ratios, for what size mortgage and what sales price can a buyer pre-qualify for, if he or she makes $45,000 annually and has $350 in long-term, monthly debt? The buyer plans to put $10,000 down. Also, what is the monthly (P & I) payment? (Based on no Tax.
3420UG-E-A 7/2/04 9:06 AM Page 48 Qualifying Mortgage Amount and Sales Price (Including Down Payment, Property Tax and Monthly Heating/Condo Fees) The same buyers as in the previous example (who make $45,000 annually and have $200 in long-term monthly debt) wish to buy a lower-priced condo, but can only afford $7,500 down. If you include estimated annual property tax of 1.
3420UG-E-A 7/2/04 9:06 AM Page 49 “Restricted” Qualifying Buyers who make $45,000 annually and have $75 in long-term monthly debt wish to buy a home offered at $165,000. They will put 15% down. Will they qualify? For what maximum mortgage amount can they qualify? (Use previously stored 7.5% interest and 25-year term, tax rate of 1.5%, monthly heating expense of $100, and qualifying ratios of 32%:40).
3420UG-E-A 7/2/04 9:06 AM Page 50 (Cont’d) “Unrestricted” Qualifying The amount calculated above is the “restricted” mortgage they may qualify for, based on current income and debt.
3420UG-E-A 7/2/04 9:06 AM Page 51 Qualifying Comparison (Comparing 2 Different Mortgages or Qualifying Ratios at Once) Given a buyer's annual income of $45,000, $150 in long-term monthly debt, a 10% down payment, monthly heating expense of $75, an interest rate of 7.25% and term of 25 years, what mortgage amounts can they qualify for based on both 32%:40% and 35%:42% ratios? Also, find the corresponding total monthly PITH payment for each. Estimate property taxes at 1.25%.
3420UG-E-A 7/2/04 9:06 AM Page 52 Finding Income Required and Allowable Monthly Debt Using the 32%:40% ratios, how much income would a buyer need to finance a $180,000 home, if they put 35% down? What is the maximum allowable debt? What is the dollar down payment and mortgage amount? What is the monthly payment? Use 7.05% interest for 25 years. Estimate property tax rate at 1.5% and $80 for monthly heating expense.
3420UG-E-A 7/2/04 9:06 AM Page 53 Solving for Actual Qualifying Ratios A buyer who makes $60,000 per year and has $350 in long-term monthly debt wants to borrow $100,000 to purchase a home. He has $55,000 down payment and annual property tax is estimated at 1.4%. Monthly housing expenses are estimated at $150. Use 7.5% interest for 25 years.
3420UG-E-A 7/2/04 9:06 AM Page 54 EXAMPLES — U.S. MODE Finding the Monthly Loan Payment (Based on U.S. Interest Rate) IMPORTANT NOTE: Your calculator must be in U.S. Mode to complete the following examples. If it isn’t, press s 9. Also, when returning to Canadian examples, be sure to return to Canadian Mode by pressing s 9 again. Find the monthly payment on a 30-year loan of $215,000 at 7.5% annual U.S. interest.
3420UG-E-A 7/2/04 9:06 AM Page 55 Property Taxes, Property / Hazard Insurance and Monthly Housing Expense Your calculator has keys that store estimated local annual Property Tax, Property Insurance and Mortgage Insurance (if applicable), and monthly estimated housing expense. This allows you to calculate the PITI (Principal, Interest, Tax and Insurance) payment and Total Payment (PITI plus Mo. Expenses), in addition to the regular P&I payment.
3420UG-E-A 7/2/04 9:06 AM Page 56 PITI Payment (Tax and Insurance Entered as %) Find the PITI payment on a 30-year, 8.4% loan if the home’s selling price is $125,000 and the down payment is 5%. Annual property taxes are estimated at 1.3%, annual property insurance at 0.25% and annual mortgage insurance at 0.45%.
3420UG-E-A 7/2/04 9:06 AM Page 57 Calculating Tax and Insurance % or $ If loan variables are entered in addition to tax and insurance percentage rates or dollar values, the respective Tax/Insurance dollar values or percentage rates can be viewed by simply pressing the applicable keys a second time. For example, enter an annual property tax rate of 1.5%, a property insurance rate of 0.25% and a mortgage insurance rate of 0.75%.
3420UG-E-A 7/2/04 9:06 AM Page 58 Finding the Interest Rate Find the interest rate if the mortgage is $98,500, term is 30 years and payment is $1,150 a month. STEPS KEYSTROKES Clear calculator oo Enter Loan Amount 98500l Enter Term in years 30T Enter monthly P&I Payment 1 1 5 0 p Find annual Interest ˆ Find periodic Interest ˆ DISPLAY 0.00 98,500.00 30.00 1,150.00 “run” 13.78 1.
3420UG-E-A 7/2/04 9:06 AM Page 59 Finding Sales Price and Payment Based on Loan Amount and Down Payment Find a home’s sales price if you've been approved for a $200,000, 30-year, 7.5% mortgage and you plan to put 20% down. Also find your monthly payment. STEPS KEYSTROKES Clear calculator Enter Loan Amount Enter Term in years Enter annual Interest rate Enter Down Payment % Find sales Price Find monthly P&I Payment oo 200)l 30T 7•5ˆ 20d P p DISPLAY 0.00 200,000.00 30.00 7.50 20.00 250,000.
3420UG-E-A 7/2/04 9:06 AM Page 60 ARM Payment — Worst-Case Scenario Find the initial monthly payment on a 30-year, $176,000 mortgage at 8.25% annual interest rate, and then find the second and third year's “worst-case” adjusted payments if this ARM loan increases 1% at the end of each year. Then, find the remaining loan balance, current interest rate and term.
3420UG-E-A 7/2/04 9:06 AM Page 61 ARM Payment — Using Lifetime Cap Using the previous mortgage, add a lifetime cap of 4% and find the adjusted payments through year six. You will need to re-enter the Loan Amount, Term and Interest.
3420UG-E-A 7/2/04 9:06 AM Page 62 Increasing and Decreasing ARM Payment Find the ARM payments for a $300,000, 30-year ARM loan that starts out at 5% but increases 1% after six months and then decreases 1.5% after an additional 12 months. STEPS KEYSTROKES Clear calculator Enter Loan Amount Enter Term in years Enter annual Interest rate Find initial monthly Payment Enter 1st ARM adjustment Find higher ARM Payment Enter 2nd ARM adjustment Find lower ARM Payment oo 0.00 300)l 300,000.00 30T 30.00 5ˆ 5.
3420UG-E-A 7/2/04 9:06 AM Page 63 Amortization List for Individual Year(s) — Using “Next” Feature How much total interest and principal will you pay on a 30-year, $90,000 loan at 8% interest during the first year? The second year? Third year, etc.? First, find monthly payment to “set-up” this loan. The calculator will automatically advance to the next year upon subsequent presses of a.
3420UG-E-A 7/2/04 9:06 AM Page 64 APR, Total Finance Charges (Including Mortgage Insurance) You are financing a mortgage of $275,000 for 30 years at a nominal or quoted rate of 6.25% interest. The cost of getting the loan is quoted as 1.5 points plus $550 in fees. What is the APR (including Mortgage Insurance), total finance charges, principal amount financed, total cost, P&I payment, monthly Mortgage Insurance, and PIMI payment? Mortgage Insurance is estimated at 0.65% of the loan amount.
3420UG-E-A 7/2/04 9:06 AM Page 65 Bi-Weekly Loans Your calculator includes a built-in Bi-Weekly loan function (s T), which allows you to convert established, fully amortized monthly loans into Bi-Weeklies (in which one-half the monthly payment is made every two weeks). Because you make two extra half-payments per year (since 26 Bi-Weekly payments is like making 13 payments/year), these kinds of loans can amount to large interest savings and a substantial reduction in the time it takes to pay them off.
3420UG-E-A 7/2/04 9:06 AM Page 66 Estimated Income Tax Savings and “After-Tax” Payment IMPORTANT NOTE: This example estimates the annual tax savings (including property tax and mortgage interest). It is important to inform your clients to consult a tax advisor for an accurate income tax deduction calculation for their particular tax situation. Buyers in a 28% income tax bracket are looking to finance a $150,000 mortgage for 30 years at 8% annual interest.
3420UG-E-A 7/2/04 9:06 AM Page 67 Mortgage Interest Tax Deduction — 28% or 30% Tax Bracket What is the Mortgage Interest Tax deduction for the first year (if loan starts in January*) on a $310,000, 30-year loan at 7.25% interest? Base it on 28% tax bracket (default). Then, recalculate based on a 30% tax bracket. STEPS KEYSTROKES Clear calculator Enter Loan Amount Enter Interest Enter Term Find monthly Payment Enter Year 1 Find total Interest in Year 1 Find total Principal in Year 1 Find Prin.
3420UG-E-A 7/2/04 9:06 AM Page 68 Rent vs. Buy If your client is currently renting a home for $1,250/month, what is the comparable home sales price and loan amount that he or she could afford? What is the estimated annual and monthly income tax savings, if they were to finance this mortgage? The current rate is 7.5% on a 30-term fixed-rate mortgage, and your client can afford to put 10% down. You estimate local taxes at 1.25% and property insurance at 0.35%. Your client is in the 28% tax bracket.
3420UG-E-A 7/2/04 9:06 AM Page 69 Qualifying Loan Amount and Sales Price (Complete Example Including Down Payment, Tax / Insurance, Monthly Association Dues) Buyers who make $75,000 annually and have $500 in long-term monthly debt wish to buy a home but can only afford $5,000 down. If you include estimated annual property taxes and insurance of 1.5% and 0.25%, respectively, a mortgage insurance rate of 0.
3420UG-E-A 7/2/04 9:06 AM Page 70 “Restricted” Qualifying Buyers who make $68,000 annually and have $750 in long-term monthly debt wish to buy a home offered at $175,000. They can only afford $5,000 for the down payment. For what maximum loan amount can they qualify? (Use previously stored 7.5% interest, 30year term, Tax/Ins./MI rates of 1.5%, .25% and 0.6%, respectively, and qualifying ratios of 28%:36%. Re-enter $50 association dues and $5,000 down.
3420UG-E-A 7/2/04 9:06 AM Page 71 (Cont’d) “Unrestricted” Qualifying The amount calculated on the previous page is the loan they may qualify for, based on current income and debt. What are the buyer's actual income and debt ratios? What does the “unrestricted” loan amount calculate to, and which side is it based on (i.e., buyer's income or debt)? What is the buyer’s maximum allowable debt? STEPS KEYSTROKES DISPLAY Find actual Ratios Find “unrestricted” Loan Amount Find allowable Debt q “run” 22.
3420UG-E-A 7/2/04 9:06 AM Page 72 Finding Income Required and Allowable Monthly Debt Using the 28%:36% ratios, how much income would a buyer need to finance a $250,000 home, if they put 20% down? What is the maximum allowable debt? What is the dollar down payment and loan amount? What is the monthly payment? Use 7.5% interest for 30 years. Estimate property Tax/Insurance rates of 1.5% and .25%, respectively. Clear mortgage insurance rate to zero, as they are putting 20% down.
3420UG-E-A 7/2/04 9:06 AM Page 73 Qualifying Comparison (Comparing 2 Different Loans or Qualifying Ratios at Once) Given a buyer's annual income of $45,000, $500 in long-term monthly debt, estimated monthly homeowner’s association dues of $50, an interest rate of 7.25% and term of 30 years, what loan amounts can they qualify for based on both 28%:36% and 29%:41% ratios? Also, find the corresponding total monthly payment for each. Estimate property tax/insurance rates of 1.25% and .
3420UG-E-A 7/2/04 9:06 AM Page 74 APPENDIX Default Settings Performing a total Reset (see below) will return the calculator to the following default settings: • • • • • • • • • • • Canadian Interest Mode Two Fixed Decimal Places 12 Periods per Year = Reset to 12 Upon O Property Tax/Ins. = Values Cleared Upon O Mortgage Ins.
3420UG-E-A 7/2/04 9:06 AM Page 75 Error Codes With an incorrect entry or answer beyond the range of the calculator, the display will show one of the following error messages. To clear an error, simply press any key.
3420UG-E-A 7/2/04 9:06 AM Page 76 Repair and Return Warranty, Repair and Return Information! Return Guidelines: 1. Please read the Warranty in this User’s Guide to determine if your Calculated Industries calculator, measuring device or electronic tool remains under warranty before calling or returning any device for evaluation or repairs. 2. If your calculator won’t turn on, try pressing the “Reset Button” first. If it still won’t turn on, check the batteries as outlined in the User’s Guide. 3.
3420UG-E-A 7/2/04 9:06 AM Page 77 Warranty Warranty Repair Service – U.S.A. Calculated Industries (“CI”) warrants this product against defects in materials and workmanship for a period of one (1) year from the date of original consumer purchase in the U.S. If a defect exists during the warranty period, CI at its option will either repair (using new or remanufactured parts) or replace (with a new or remanufactured calculator) the product at no charge.
3420UG-E-A 7/2/04 9:06 AM Page 78 Disclaimer CI MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCT’S QUALITY, PERFORMANCE, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. AS A RESULT, THIS PRODUCT, INCLUDING BUT NOT LIMITED TO, KEYSTROKE PROCEDURES, MATHEMATICAL ACCURACY AND PREPROGRAMMED MATERIAL, IS SOLD “AS IS,” AND YOU THE PURCHASER ASSUME THE ENTIRE RISK AS TO ITS QUALITY AND PERFORMANCE.
3420UG-E-A 7/2/04 9:06 AM Page 79 INDEX Accumulative Memory µ, 17 Adjustable Rate Mortgages (U.S.), 59 Amortization and Remaining Balance, 35 Amortization List for a Range of Payments or Years, 40 Amortization List for Individual Payment(s), 39 Amortization List for Individual Year(s)—Using, 37 Amortization List for Individual Year(s)—Using Month Offset, 38 Appendix, 74 Appreciation/Future Value, 41 APR Example (U.S.), 64 ARM Payment—Using Lifetime Cap (U.S.), 61 ARM Payment—Worst-Case Scenario (U.S.
3420UG-E-A 7/2/04 9:06 AM Page 80 Non-Monthly Loans, 28 Paying Off a Mortgage Early, 27 Payment – P&I, 26 Payment – PITH, 32, 33, 34 Payment – PITI, 56 Payment – Interest-Only, 27, 34 Percent Change, 22 Percentage Calculations, 22 PITH Payment, 32, 33, 34 PITI Payment (U.S.), 56 Preference Settings, 17 Property Taxes, Property/Hazard Insurance and Monthly Housing Expense, (U.S.), 55 Qualifying Examples (CANADA), 46 Qualifying Examples (U.S.
3420UG-E-A 7/2/04 9:06 AM Page 81 USER’S GUIDE — 81
3420UG-E-A 7/2/04 9:06 AM Page 82 Available at: JUBILEE ROSE ENTERPRISES LTD. Tel: (604) 535-7339 Fax: (604) 535-7691 Email: sales@jubileerose.com Website: www.jubileerose.
3420 UG CVR 7/6/04 1:57 PM Page 2 Designed in the United States of America Printed in China 3420UG-E-A 7/04
