Why Do You Need a Loan Payoff Calculator?

Loan Payoff Calculator – Know If Your Hard Money Lender Is Over Charging You.

Before diving straight into the loan payoff calculator, let’s start with the basics about hard money lending.  Whenever someone borrows money to purchase a property they typically have interest and principal payments due.  The interest on the loan starts from the very beginning of the loan.  At the closing table the borrower will usually prepay a few days interest.  This interest is until his regular monthly payments start.

For investors, a hard money lender can have you prepay interest.  The lender may also simply have you start your payments 30 days from the date of closing.  In some cases, your lender will defer the interest and points to whenever you sell the property.  The important aspect is when you sell the property, you will be repaying your lender interest and principal at the closing table.  It will be repaid with the funds being taken from the proceeds of the sale.

As I look at closing statements for investors, I notice that the amount of accrued interest at the sale of the property was often incorrect.  Hard money lenders had often added additional days onto the number of days the funds were borrowed.  Initially this may not seem to be very important.  However in the HUD Closing Statements I reviewed, it amounted to hundreds of dollars.

Because of this I decided to put together a Loan Payoff Calculator.  The borrower and the lender can now get “instant” access to the correct principal and interest payoff of an investor’s loan.  The key to calculating a correct payoff is to know the exact number of days between when the money was borrowed and when it was repaid.  This may sound simple.  However, it can get interesting because of the different number of days in various months.  The calculator that I programmed takes this difference in monthly days into account automatically.

There are a few different scenarios when an investor can use the calculator

~The lender charges a flat fee to use the money.  Typically this is transactional funding.  There is no accrued interest.

~The lender charges interest and points at the sale of the property.

~The lender charges monthly interest, accrued interest and principal at the closing.

~The lender charges points, monthly interest and accrued interest at the closing.

To do any of the above calculations that deal with accrued interest you can use the calculator.  Simply adjust the various data inputs into the spreadsheet. I suggest you check what your lender calculates no matter how much you trust them.  Many times an incorrect interest calculation happens.  Perhaps it happens because of the user.  It can also be because the formula they are using includes too many days.  This is sometimes by design of the lender.

Too many times we have asked how the accrued interest was calculated.  The person doing the closing found out the lender had added 3 – 6 days after the closing.  Perhaps they figured no one would know.  Alternately it could be an honest error in calculating the number of days in one or two months.  Maybe the lender could have used an average number of days (30) in each month to calculate the interest due.  Make sure to use the calculator.  If there is an error in your favor you have an option to tell the lender.  It is likely you will be saving yourself money most of the time.

To use the free loan payoff calculator, you can find it here at https://transactionalfundingfl.com/loan-payoff-calculator/

Loan Payoff Calculator

To your limitless success,

Dave Dinkel

Visit transactionalfundingfl.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at transactionalfundingfl.com if you have questions or concerns (support@davedinkel.com).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.
About Dave Dinkel 27 Articles
Dave Dinkel graduated from the University of Florida in 1968 with a BS in Chemical Engineering. He initially worked for a petrochemical research and development company in Illinois. Later he entered the financial arena as a stock and commodity broker with Merrill Lynch.While a stock broker he became a Certified Financial Planner and later started his own brokerage firms and stayed in the financial services industry for 22 years before retiring to pursue his love of real estate investing. After retirement, and because of his interest in business start-ups, he worked with a small company for a few years while driving their sales from under $12,000,000 to over $150,000,000 annually before going back to full-time real estate investing.Dave Dinkel has been a national platform speaker, contributor to local real estate clubs, mentor and consultant to numerous real estate investors and all the while running his own real estate business. Mr. Dinkel received the following degrees or designations: BSChE, FINOP, CFP, MSRP, RSP, RR, ROP, SROP, MGA, GA, Certified Estate Planner, Licensed Mortgage Broker, and Licensed Insurance Agent. He is often referred to as the “Teacher of Teachers” and his Mentoring continues to produce Students who go on to be national real estate "Gurus". .He has been a real estate investor since 1975 and recently received the first-ever Lifetime Achievement Award for Contribution to the Real Estate Investing Community. While being active in real estate investing for over 40 years, he and his wife Nancy have been married for over 52 years. He is most well known for the development of his Mentoring Program that has been called, "The Best Mentoring Program in the Country" which he continues today.In addition to his Mentoring Program, he started a full-service transactional funding Program so that new investors had the ability to do deals with no money of their own. He challenged the funding industry by making borrowing money very simple with his "One Point Funding Program" which has revolutionized the transactional funding industry and made millions of dollars available to investors who otherwise could not have afforded it. Currently his transactional funding is only available in Florida.Get more information about his real estate investing mentor program at http://www.DaveDinkel.com