Financial Update (Third Quarter 2007)

Federal Reserve Offers Online Mortgage Calculator

calculatorThis summer, the Federal Reserve unveiled its latest tool to help consumers manage their finances: an online mortgage comparison calculator. The tool allows consumers to compare monthly mortgage payments and the amount of equity they will accrue for up to six types of fixed- and adjustable-rate mortgages.

Simplifies comparison mortgage shopping
Designed for ease of use, the calculator simplifies comparison shopping among 30- and 15-year fixed-rate mortgages, interest-only fixed-rate mortgages, adjustable-rate mortgages (ARMs), interest-only ARMs, and payment-option ARMs.

"We have created a tool that will allow consumers to look ahead to see how much equity they will build and what their mortgage payments might be three, five, seven, or 10 years down the road with different mortgage products," said Federal Reserve Gov. Randall S. Kroszner. "These comparisons should encourage more consumers to shop around and compare mortgage offers."

Mortgage comparison calculatoroff-site image

Host of useful features
When a consumer identifies the type of mortgage product under consideration, the calculator asks for information about home value, the primary mortgage amount, and estimated interest rates and option information including the amount of a second mortgage and the premium on private mortgage insurance.

With this information, the calculator estimates the loan balance and home equity in future years, the initial monthly payment (broken down into interest and principal), future monthly payments with no interest rate change, and future monthly payments with a change in interest rates.

It also includes a mortgage shopping worksheet, a glossary of mortgage terms, and links to the Board of Governors’ other consumer education resources on mortgages.

July 17, 2007