| Financial Asset Building Calculators |
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| The FAB Calculators |
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The FAB Calculators are three unique financial planning tools for exploring asset building strategies, analyzing debt and determining housing affordability. These flexible applications allow users to quickly test many asset building, debt reduction or home purchasing scenarios to understand current and future impacts on personal finances.
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| FAB Asset Calculator |
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The FAB Asset Calculator© is a powerful financial planning tool for use in testing strategies for building assets. Uses of the asset calculator include:
- retirement planning
- testing college funding plans
- developing strategies for saving to purchase a home or start a business
- comparing taxable and tax-free investment options
- IDA (individual development account) analysis
The Asset Calculator relies on different life stages as a planning strategy. Each life stage represents varying capacity to make contributions to – and varying needs to withdraw from - personal assets.
The flexible calculator allows users to input different sources of contributions to and different types of withdrawals from the asset account. Users can adjust timing and amount of withdrawals and contributions.
Because the calculator depends on "constant dollars," users can understand the results over time without having to adjust for inflation.
The calculator uses three fixed investment return rates and one user-determined rate to calculate the projected value of asset balances. This approach allows for both taxable and non-taxable account analysis.
Users can explore annuities and one-time or regularly scheduled withdrawals. The Asset Calculator produces a graph of personal asset dollars over time.
The FAB Asset Calculator© (.xls)
The FAB Asset Calculator© Power Point Presentation (.pdf)
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| FAB Debt Calculator |
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The Debt Calculator© demonstrates the implications of credit card and other debt obligations on a user’s financial plans.
By entering for each debt the APR - annual percentage rate, the amount owed, and the planned or required monthly payments, the Calculator will generate:
- time needed to pay off each account balance
- total expected payments needed
- expected interest that will be paid until each balance is zero
The calculator allows the user to visualize the impacts of changes in monthly payments and determine how best to allocate available monthly funds to the different debts.
A mortgage calculator built into the Debt Calculator will calculate the required monthly payment based on the amount borrowed, the interest rate, and the loan term. The Calculator displays the total interest paid if all required monthly payments are made on a timely basis.
The Calculator can calculate the effective interest rate for special loans such as payday loans, pawnshop loans, or other short-term loans. In such cases the lender does not charge traditional interest and assesses "fees" that reflect the loan amount plus a set fee or percentage of amount borrowed.
The Debt Calculator© (.xls)
The Debt Calculator© Power Point Presentation (.pdf)
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| FAB Housing Affordability Calculators |
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The two FAB Housing Affordability Calculators© allow users to explore household and regional housing affordability.
Calculator 1 gives users a general idea of the income needed to purchase a home at a particular price, the top price that the user could pay based on household income or the relative affordability of housing in the region. The calculator uses basic assumptions and one or more of three inputs - house price, annual gross income, and lender approved income ratio to assess housing affordability.
Calculator 1 uses three interest rates to assess housing affordability - a historical interest rate and a low and high rate. The calculator assumes a 30-year mortgage with a 20 percent down payment and a lender allowed 30 percent ratio of housing expenses to gross income.
Depending on a household's credit score or the financial market, a lender may use a different housing expense ratio than the assumed 30 percent ratio to determine the maximum housing loan that they would finance. If this is the case, the appropriate ratio can be entered to modify Calculator 1 results.
Calculator 1 assesses regional housing affordability by entering in either the median value of homes in the region or the median sale price of homes and the regional median household income. An affordability index is produced for each of the three interest rates. An affordability index of 1.000 indicates that the median income household can afford the median priced home.
Calculator 2 provides a more accurate estimate of what a household can afford by adding additional property and household factors traditionally used by lenders in their loan approval process. It does this by allowing the user to specify down payment amount, mortgage term, interest rates, property taxes, insurance, other monthly debt obligations and credit scores. This allows the user to test out different alternatives for purchasing a home.
Calculator 2 uses a 40 percent total debt-to-income ratio in calculating the mortgage that a lender will approve. It automatically incorporates the cost of mortgage insurance for down payments less than 20 percent of the purchase price. The calculator uses the monthly costs for other debt such as auto loans, other personal or property loans, school loans, minimum payments on credit card balances, alimony or child support payments, etc. in its calculations.
By using these calculators, users will get a realistic view of the household’s current and future financial picture.
The FAB Housing Affordability Calculators© (.xls)
The FAB Housing Affordability Calculators© Power Point Presentation (.pdf)
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| For More Information |
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Contact
Richard Bjelland
503.986.0983
E-mail
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