Loan Types - Details
There are three different types of mortgages you can reflect in the system
Mortgage reflects a traditional mortgage with an interest rate and amortized payments. If you enter the Original amount, Interest rate, and Loan term, RightCapital will calculate the amortized monthly payment amount, which you will see under 'Minimum payment'. The greater of the Minimum payment and Monthly payment will be paid each month until the Balance is fully depleted.
You can also just enter the existing Balance and Monthly payment, that amount will be paid until the Balance is fully depleted.
Adjustable rate mortgage allows you to reflect two different interest rates over the duration of the loan. You can specify an Initial rate that will apply for the Initial period (in years) that you enter, and then an Interest rate that applies for the remainder of the loan. For example, if a 30-year adjustable rate mortgage is locked in at 4% for 10 years, then adjusts thereafter, you can put in an initial period of 10 years, initial rate of 4%, and then a different Interest rate that would apply for the remaining 20 years.
Interest only mortgage allows you to specify an initial period during which only interest is paid, after which amortized payments will be made. The rate used during the interest only period will be the rate entered as the Initial rate; after the interest only period we will use the value entered under Interest rate. Payments will be automatically calculated based on the data inputs.
For both adjustable rate and interest only mortgages, the 'Loan term' should be the total term, not the duration after the initial term. For example, a 30-year interest only mortgage with a 10-year interest only period should be entered with an initial period of 10 and loan term of 30.
All mortgage information will show on the Summary / Expenses / Housing page in the Cash Flow details.
A Home equity loan illustrates a works similarly to a Mortgage, see above.
A Home equity line of credit (HELOC) allows you to reflect the interest and payments associated with an existing HELOC where you have drawn money from the line of credit. Only the money that has been drawn from the line of credit should be entered as a HELOC loan. Calculation of the payments is the same as for an Interest only mortgage, see above.
Home equity loans / lines of credit will display in the Home equity line on the Balance Sheet details and on the Summary / Expenses / Debt page in the Cash Flow details.
Reverse mortgages allow you to reflect a HECM mortgage, including the income associated with that mortgage. You can specify an ongoing Annual income amount which will be included as tax-free income until the point specified as when the Income ends. Reverse mortgage income will display in the Cash Flows under Summary / Income Inflows / Other Income
The reverse mortgage balance will accumulate each year, reflecting interest, any additional income received, a 0.5% HECM mortgage insurance premium, and any Annual fee that you specify. You can see this on the Net Worth page of the Cash Flows.
Reverse mortgages are only available if the owner of the reverse mortgage is age 62 or older.
For more information, please visit the separate Student Loans page.
For Car loans or Other loans, you can specify the Monthly and Minimum payments, the Interest rate, and current Balance. Each month, interest will be added to the loan and the greater of the Monthly and Minimum payments will be made, until the Balance is fully depleted.