Business Assistant/Business Assistant.iso/home/loan/lw-ug.txt

Text File | 1990-02-27 | 8.4 KB | 106 lines

         Loan Warrior Amortization Program

         The LoanWarrior (LW) is a basic tool used in calculating loan
         characteristics.  One of the most popular uses of
         amortization programs is to provide the user a quick look at
         the loan schedule of potential home mortgage payment
         schedules.  In practice, however, LW can be used for any type
         of amortizing problem.  The dictionary defines the term
         "amortize" as : 1. To liquidate (a debt) by installment
         payments or payment into a sinking fund.  While there are
         other types of uses for amortization schedules, the following
         documentation is intended to be used in terms of this
         definition.

         Running Loan Warrior :  LW will run on any IBM PC/XT/AT or
         compatible with 128K memory available.  Two different modules
         are available, Fixed and Variable.  These are accessed from
         the Main Menu.  The Main Menu is accessed directly from the
         disc with the command 'STARTLW2'.  LW is not copy protected, and
         therfore may be transfered easily to fixed disc by copying
         all of the files on the disc.

         LoanWarrior Available Options : The following is a description
         of each menu in LW, presented in the order the menus appear.

         (1) Start Menu : From here you can run LW with or without an
         existing data file.  If you choose an existing data file, a
         list of files available is shown; you must enter one of these
         file names with the proper extension.  If you choose to run LW
         without an existing file, a dummy file is input for you to
         edit.

         (2) Input Definition Menu : Four variables define the loan -
         interest rate (percent), term (years), initial principle ($),
         and compounding period (year or month).  You may edit one or
         all of these from this menu.

         (3) Accelerated Principle Payments :  If you choose this
         option, you can put money toward added principle payment,
         above the scheduled fixed payment.  This money goes directly
         toward reducing the principle, and thus reduces the term of
         the loan and the final total interest paid.  This is useful
         to determine the effect of regular added payments and/or lump
         sum payments on the life of the loan.

         To use this option, you will be asked to input interest rates
         for any given block of periods you specify, with the "last
         year" being input for all remaining periods. For example, if
         you have an adjustable rate mortgage, with interest increasing
         from 7%, one percent per year for 3 years:

                         LW Prompt              enter:

                   first period to be changed :    2
                   last year to be changed    :    4

                   interest for period 2      :    8
                   interest for period 3      :    9
                   interest for period 4      :    10

         Note that the rate for all periods after 4 will be 10 also.

         (4) Variable Interest Rate (only on Variable module) : The
         interest rate applied to each period can be specified with this
         option.  This is useful in determining the effect of ARM's
         (adjustable rate mortgages) on the loan schedule.  Input data
         the same way you did in (3).

         (5) Report Destination : You may designate your printer or
         monitor as the output device.

         (6) Specify Output Period : In a given analysis, you may
         designate one specific block of periods you wish to view/print.
         This is helpful when you have, for example, a 30 year loan and
         are using monthly analysis (360 periods), and only wish to see
         the 15th year (months 180 to 192). Input 180 as start and 192
         as finish.  When using the accelerated principle option with
         this, you may inadvertantly specify a period that only
         partially exists, or doesn't exist at all because your
         additional payments pay the loan off sooner than you think.  If
         the first period you specify exists, but the loan ends
         somewhere in between, you will just be shown the final period.
         If the first period does not exist, you will immediately get
         just the final period, with no report header.

         (7) Report Format : You may designate either a Summary (only
         inputs, calculated payment per period and total interest
         paid) or Detailed (loan status per period; principle payment,
         interest payment, total interest paid to date, principle
         remaining) reports.   A detailed report on a long term loan
         with monthly compounding will produce a very large amount of
         data.  (See (6) to help with this problem)

         (8) Saving a Data File :  After the reports are processed,
         you will be asked if you wish to leave the program, return to
         the main menu, or save the current data.  If you choose to
         save the data, you will be asked to input a file name (up to
         8 characters) with thr proper extension (.FIX or .VAR,
         depending which module you are in).

         Note that option 3 is the only difference between the Fixed
         and Variable LoanWarrior Modules; in all other repects they
         run in the same way.

         Good Luck!