So! Looking to buy a house. I have an idea of what I want to do, and I know that the idea itself is sound, but I'd really like to find the right formula that will spit out the payment schedules that I want so that I can have a good idea of what it means on a month to month basis when I'm looking at price tags.
What I'm looking at is basically the old pay it off early scenario. I want to get, say, a 15-year fixed, and throw money at it above and beyond the minimum payment until I have it paid off. My target payoff date is 5 years from closing.
I'm a little skittish about just looking for a 5-year mortgage, since A) those seem to be more rare than even a 10-year loan, and B) the minimum monthly payments for a 5-year mortgage, given the same rates as a 10-year loan for a house of the same cost (depending on the final cost of the chosen home, of course), miiiiight be pushing it if (when) something goes sideways.
This would be easy enough to calculate if it was a straight 5-year loan, sure, but I don't know how to calculate what effectively would be something like (for a 10-year loan):
- X outstanding balance
- Y rate
- Z payment amount
- 120 payments over 120 months, spread over principal/interest at an ascending/descending rate respectively
- Now, solve for Z using 120 payments over 60 months, with alternating payments going toward principal reduction, and known good estimates for X and Y
I know in practice that getting a loan holder to properly apply extra payments to principal is a YMMV thing (or MMMV, I guess), but assuming that my lender applies payments as instructed, is it just a matter of cutting the payment number in half? Surely applying the extra payment amount to only the principal makes the calculation more complex than that, right?
This is all very preliminary on my part. I talked to a couple of lenders about six months ago, but that fell through due to an unexpected financial downturn. I recently managed to definitively put a stake in that issue, and I'd like to at least begin to look around for something better than my current housing situation. I really want to have as many of my ducks in a row as possible before I start looking in earnest, which to me means running some numbers and figuring out what I can comfortably afford before
I start talking to people who want to sell me either a piece of real estate or a financial product that enables the purchase of same.
Anybody have a reliable formula for this? Or know of a preexisting calculator that will give me some reliable results?