LoanVibe Worksheet - Mr & Mrs Robert Average

July 4, 2004
Mr & Mrs Robert Average 1234 Oak Street Torrance, CA 90505 Dear Mr & Mrs Robert Average, Mortgage loan programs will often provide for an interest rate "buy-down". This means that by paying additional origination fees (points), you can enjoy a lower interest rate for the life of the loan. Depending on the term of the loan, the long-term savings could be substantial.
Buy-Down Estimates
Options	Terms	Payment	Rate	Fees	Added Fee	Ttl. Savings†
Loan 1	30 year fixed rate	$1,216	4.500%	$1,200	N/A	N/A
Loan 2	30 year fixed rate	$1,181	4.250%	$3,600	$2,400	$10,340
Loan 3	30 year fixed rate	$1,146	4.000%	$6,000	$4,800	$20,489
	†Estimates based on 30 year projections


Let's take a look at a home purchase verses renting. When we consider the tax benefits provided by a mortgage loan, plus the benefit of home appreciation, owning a home can prove to be a substantial advantage.

Ownership versus Renting
	Total Payments	Tax Benefits		Appreciation	Total Cost	Total Savings*
*Current Rent*	$694,870	N/A		N/A	$694,870	N/A
Loan 1	$437,776	$73,177		$104,907	$259,692	$435,178
Loan 2	$425,036	$68,463		$104,907	$251,666	$443,204
Loan 3	$412,487	$63,820		$104,907	$243,760	$451,110

Estimates based on 30 year projections, tax benefits are based on a 37% tax bracket, rent payments of $1,425 based on 2% annual increase *Home appreciation based on Loan 1: $300,000 / Loan 2: $300,000 / Loan 3: $300,000 sale price and Loan 1: 1.00% / Loan 2: 1.00% / Loan 3: 1.00% annual appreciation rate,

The following pages will provide a detailed description of each loan considered as well as performance estimates. If you have any questions please call me at 310-555-1234. Thank you for considering ACME Mortgage. Sincerely, Joe Officer

prepared for:	prepared by:
Mr & Mrs Robert Average 1234 Oak Street Torrance CA 90505 310-555-1234, 310-555-6547 average@loanvibe.com	Joe Officer ACME Mortgage 1234 Main Street Torrance, CA 90503 310-555-1234, 310-555-6525 joe@perfectfinancial.com


Transaction Descriptions	Loan 1	Loan 2	Loan 3

Loan Name:	Standard Fixed	Standard 1pt buydown	Standard 2pt buydown
Lender Name:	In House	In House	In House
Type:	30 year FIXED	30 year FIXED	30 year FIXED

Start Rate:	4.500%	4.250%	4.000%
Points:	0.500%	1.500%	2.500%
Adjustable Description: [adjs,caps]	Fixed	Fixed	Fixed

APR:	4.54%	4.38%	4.21%
Loan Amount:	$240,000	$240,000	$240,000
Closing Costs:	$1,200	$3,600	$6,000

Last Payment Month:	360	360	360
Income Required to Qualify:	$4,285	$4,160	$4,037
Qualify Ratios:	17/17%	16/16%	16/16%

Start Payment [PITI]:	$1,414	$1,373	$1,332
Property Value:	$300,000	$300,000	$300,000
Property Appreciation:	1%	1%	1%

Loan to Value [LTV]:	LTV: 80%	LTV: 80%	LTV: 80%
Down Payment Required:	$60,000	$60,000	$60,000
Cash Required to Close:	$61,200	$63,600	$66,000

Borrower's Monthly Income:	$8,500	$8,500	$8,500
Borrower's Tax Bracket:	37%	37%	37%

prepared for:	prepared by:
Mr & Mrs Robert Average 1234 Oak Street Torrance CA 90505 310-555-1234, 310-555-6547 average@loanvibe.com	Joe Officer ACME Mortgage 1234 Main Street Torrance, CA 90503 310-555-1234, 310-555-6525 joe@perfectfinancial.com


Worksheet	Loan 1	Loan 2	Loan 3
Evaluation for month: 012
Accum Costs	$11,921	$13,722	$15,523
Accum Costs Compare	lowest	higher by $1,801	higher by $3,602
Accum Payment	$14,593	$14,168	$13,750
Accum Tax Benefits	$3,967	$3,745	$3,524
Evaluation for month: 036
Accum Costs	$32,821	$33,432	$34,046
Accum Costs Compare	lowest	higher by $611	higher by $1,225
Accum Payment	$43,778	$42,504	$41,249
Accum Tax Benefits	$11,700	$11,038	$10,377
Evaluation for month: 084
Accum Costs	$72,211	$70,492	$68,790
Accum Costs Compare	higher by $3,421	higher by $1,703	lowest
Accum Payment	$102,148	$99,175	$96,247
Accum Tax Benefits	$26,274	$24,750	$23,232
Evaluation for month: 096
Accum Costs	$81,501	$79,215	$76,950
Accum Costs Compare	higher by $4,552	higher by $2,266	lowest
Accum Payment	$116,740	$113,343	$109,996
Accum Tax Benefits	$29,711	$27,978	$26,251
Evaluation for month: 360
Accum Costs	$198,976	$188,636	$178,487
Accum Costs Compare	higher by $20,489	higher by $10,149	lowest
Accum Payment	$437,776	$425,036	$412,487
Accum Tax Benefits	$73,177	$68,463	$63,820

prepared for:	prepared by:
Mr & Mrs Robert Average 1234 Oak Street Torrance CA 90505 310-555-1234, 310-555-6547 average@loanvibe.com	Joe Officer ACME Mortgage 1234 Main Street Torrance, CA 90503 310-555-1234, 310-555-6525 joe@perfectfinancial.com


Chart
Chart based on Accum Costs