This report illustrates the differences between a proposal that requires PMI (private mortgage insurance) and one that does not. For the proposal where PMI is not required, a second mortgage is added to avoid paying PMI. In addition, the net cost for each proposal is calculated. The net cost takes into consideration the many costs of a loan; including interest, closing costs, discount points, and mortgage insurance (if applicable). By comparing the net cost, you can quickly determine which program costs the least at specific points in time.

Based on your goal to minimize total monthly payment and an intended occupancy of 3 years, the proposals are sorted left to right, with the lowest monthly payment on the left.
PREPARED FOR
Buffy Aiacommon
Subject Property:
1 Main Street
Austin, TX 78759
PREPARED BY
Rob Desilets
(512)506-9520 ext. 123
robd@docmagic.com
Fax: (512)249-1756
Date: 12/19/2002
LOAN SUMMARY 80-10-10 30 Yr. Fixed
Loan Type Conventional Conventional The loan summary illustrates the various aspects of each proposal, including principal, rate, and terms. In most cases, the loan program that has 2 liens (no PMI) will have a higher rate for the second lien. However, that additional cost of tax deductible interest is usually less expensive than the cost of mortgage insurance.
Rate Type Fixed Fixed
Sales Price/Appr. Value $100,000.00 $100,000.00
Loan Amount $80,000.00+$10,000.00 $90,000.00
Interest Rate 6.250%/7.000% 6.250%
Term 30 Yr./15 Yr. 30 Yr.
APR 6.367%/7.043% 6.706%
 
MONTHLY PAYMENT SUMMARY 80-10-10 30 Yr. Fixed Difference
Principal and Interest (P&I) $582.45 $554.15   Even though the program without PMI has two liens, the total monthly payment is usually less than the program with PMI. In this case, the program without PMI is $11.45 lower than the program requiring PMI.
  ($492.57 + $89.88)    
Mortgage Insurance $0.00 $39.75  
Taxes $250.00 $250.00  
Hazard/Other Insurance $100.00 $100.00  
Homeowners Assoc. $41.67 $41.67  
Total Monthly Payment $974.12 $985.57 $11.45
 
ESTIMATED CASH FROM/TO 80-10-10 30 Yr. Fixed Difference
Sales Price $100,000.00 $100,000.00   Another important consideration in deciding the most favorable loan proposal is cash required at closing. In this comparison, the program without PMI has a cash requirement of $230.21 higher than the program requiring PMI.
Refinance/Debts Paid Off $0.00 $0.00  
Prepaids/Impounds $775.62 $845.41  
Charges/Fees $2,210.00 $1,910.00  
Discount Points $225.00 $225.00  
Total Settlement $103,210.62 $102,980.41  
Subordinate Financing ($10,000.00) $0.00  
Loan Amount ($80,000.00) ($90,000.00)  
Cash Required $13,210.62 $12,980.41 $230.21
From/To Borrower FROM BOR. FROM BOR.  
 
COST SUMMARY (@ end of yr. 3) 80-10-10 30 Yr. Fixed Difference
Starting Equity $10,000.00 $10,000.00   One of the most important considerations in comparing loan programs is the cost. In this comparison, the program without PMI has a net cost of $1,037.08 lower than the proposal requiring PMI (at the end of year 3).
Principal Paid $4,256.60 $3,371.85  
Interest Paid $16,727.22 $16,592.96  
Mortgage Ins./ Funding Fee $0.00 $1,431.00  
Discount Points $225.00 $225.00  
Other Closing Costs $2,210.00 $1,910.00  
Est. Tax Savings (30.0% Single) ($3,680.35) ($3,640.01)  
Equity ($14,256.60) ($13,371.85)  
Net Cost to Borrower $15,481.87 $16,518.95 $1,037.08
 
ANNUAL PAYMENT COMPARISON 80-10-10 30 Yr. Fixed Difference
Total Pmt. Ending Year 1 $974.12 $985.57 $11.45 This payment comparison compares the total payment (PITI) of the proposals at various points in time.
Total Pmt. Ending Year 2 $974.12 $985.57 $11.45
Total Pmt. Ending Year 3 $974.12 $985.57 $11.45
Total Pmt. Ending Year 4 $974.12 $985.57 $11.45
Total Pmt. Ending Year 5 $974.12 $985.57 $11.45
 
ANNUAL COST COMPARISON 80-10-10 30 Yr. Fixed Difference
Net Cost Ending Year 1 $7,746.47 $7,877.27 $130.79 This net cost comparison compares the net cost of the proposals at various points in time.
Net Cost Ending Year 2 $11,647.24 $12,223.38 $576.14
Net Cost Ending Year 3 $15,481.87 $16,518.95 $1,037.08
Net Cost Ending Year 4 $19,245.95 $20,760.72 $1,514.78
Net Cost Ending Year 5 $22,934.73 $24,945.24 $2,010.51
 
ANNUAL EQUITY COMPARISON 80-10-10 30 Yr. Fixed Difference
Equity Ending Year 1 $11,328.36 $11,054.65 $273.71 The equity comparison compares the equity of the proposals at various points in time.
Equity Ending Year 2 $12,745.24 $12,177.15 $568.09
Equity Ending Year 3 $14,256.60 $13,371.85 $884.75
Equity Ending Year 4 $15,868.74 $14,643.40 $1,225.34
Equity Ending Year 5 $17,588.45 $15,996.75 $1,591.70
 
COMMENTS/NOTES
Whether you are interested in refinancing and existing mortgage, purchasing a new home, taking out a second mortgage, or consolidating debt, we have a loan program that will meet your goals.

Contact us today at (800) 649-1362 x 1234 to receive a free analysis.
 
The data provided above is deemed to be accurate, however, certain variables are time sensitive and will vary from lender to lender (such as cost of mortgage insurance). Any tax savings provided is an estimate only. Consult with a tax professional for actual tax savings. Rates, points, and fees are subject to change without notice. The information above might not include any prepayment penalties imposed by your particular lender.
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