Why do we allow for adjustments to the payment and principal for loans?
Banks can calculate loan payments differently, for example some always round-up the payment others don’t. So we give you the ability to adjust your payment to match your lenders. In most cases these adjustments will be minimal, a penny either up or down and you can use positive or negative numbers, but you should use this only to get your payment to match your banks payment.
In most cases, you will not need to adjust the principal on loans in the loan toolkit. However, banks do have different methods for calculating remaining balances, so we give you an alternative. The loan and mortgage management software setups conventional loans. If your lender is also setting up a conventional loan the differences between what you see in loan and mortgage management and what you see from your lender will be minimal. However if your lender is setting up a different type of loan for example a loan that calculates on average daily balance, then you will need to make adjustments to keep in sync with your lender.
The loan management software has adjust loan balance fields for every payment, so you can make an adjustment on a monthly basis if you need to. Also, the mortgage management software has an adjust principal field that you can adjust at the beginning of each year of the loan. You can use positive and negative numbers in these fields.
When would I need to enter loan amount and remaining balance adjustments on loans?
If you are setting up a new loan you should enter the same amount in the loan amount and remaining balance, so the toolkit can start tracking your loan from the very beginning.
If you are setting up a loan that you have already made payments to, enter the original loan amount in the loan amount field and then get an accurate remaining balance from your lender and enter that in the remaining balance field. This is the only way to get your loan amount in sync with your bank. The remaining balance is not an approximate number or guess, it is exactly what your lender shows as your current remaining balance. If this is wrong then all the related projections will be wrong.
Most lenders provide this type of information right on their website, or you can call them to get this amount.
Why does the current loan information change when I enter a pre-pay amount?
The current loan information shows you your current payment including any planned pre-payments, the total cost of the loan, and the number of months of payments remaining.
If you don’t enter a pre-payment amount these numbers represent your current loan only. The pre-payment is added so that when it is compared to your new loan’s information, you can see what impact prepaying may have. This can help you determine whether to prepay on your current loan instead of refinancing your loan.
Why does entering planned prepayment on a mortgage increase the projected equity?
This toolkit is designed for both managing and planning the payoff of your mortgage. Prepayment is a very powerful tool in planning the payoff of a mortgage. Most people can pay off their mortgage quicker and increase their equity faster by prepaying instead of using any other method. We add in the prepayment when we project the savings in money and time. We also take into account the projected increase in equity you will gain if you do make a prepayment on your mortgage.
This prepayment will also default into the added principal field when you go to make a payment, but you can change it or delete it from your payment if you choose.