First off, I do NOT want a loan calculator.
I have a loan for a $250,000 house with 20% down (so $200,000 total now). Over a fixed rate of 5.25% for 30 years, I should come up to monthly payments around $1,104 a month.
But when I try to do it by hand, I do not get this answer, or anything close to this answer.
So can you help me?
According to the formula here:
http://www.1728.com/loanform.htm
It should be:
$200000(0.0525/12 + (0.0525/12)/[(1 + 0.0525/12)^(30*12) - 1])
$200000[0.004375 + 0.004375/(1.004375^360 - 1)]
$200000[0.004375 + 0.004375/3.81417506]
$200000[0.005522]
I get $1104.41 when I work it all out.
It’s probably a decreasing calculation, which it should be, where they work it out by deducting what you pay off the capital. This means that each month you pay very slightly less interest and more capital
References :
According to the formula here:
http://www.1728.com/loanform.htm
It should be:
$200000(0.0525/12 + (0.0525/12)/[(1 + 0.0525/12)^(30*12) - 1])
$200000[0.004375 + 0.004375/(1.004375^360 - 1)]
$200000[0.004375 + 0.004375/3.81417506]
$200000[0.005522]
I get $1104.41 when I work it all out.
References :
You can do it by hand. It is not very complicated. Here is the approach:
Let x be the monthly payment.
r = (1+.0525/12)
200,000 r^(30*12) = x+xr+…xr^(359) = x(1-r^360)/(1-r)
Plug in r and solve for x,
x = $1,104
———-
Ideas: Balance the total amount of loan and interests.
References :
even though the fixed rate is 5.25% – the true APR
Annual Percentage Rate is higher
you divide 5.25 by 12 to find out what it costs per month = .4375
and so for the year – the TRUE APR is 5.3782, not 5.25
and it’s really tough to do a 30 year mortgage by hand
that’s why there are calculators
and as the other answere said – - – your first payment
will be prolly less than 10 dollars in principal and the rest in interest
by the 360th payment – $10 will be the interest – the rest
in principal
and it slide between those two points for the life of the loan
you can know that LIFE down significantly – by making a 10% addition to each monthly check
or make a 13th payment each year
that can cut more than 10 years off the loan
all the best
References :
ps the free mortgage caculator said 1,104.41
This is a GREAT question. This is not straightforward math, since the idea of a mortgage is that you pay the vast majority of the interest up front.
If you have excel, check out this site. There are several functions in Excel that can help you establish a working sheet:
http://www.vertex42.com/ExcelArticles/amortization-formulas.html
References :