Mortgage Repayment Calculator The Federal Savings Bank
It’s math time. We’ll give a chance to run now if you’d like. ………………………………………….
Still here? Okay, let’s learn how to figure repayment of a mortgage. Sounds like fun, huh?
This is one method that works well:
1. Use the following equation M = P[i(1+i)^n]/[(1+i)^n -1] to calculate the monthly payment of a mortgage loan. The monthly payment is M, the principal (amount of the loan) is P, the interest rate is i and the number of payments to make is n.
2. Define M and P as monetary values. They must be expressed in units of the same currency in order to use this formula.
3. Convert the interest rate i into a decimal fraction. The interest rate must be expressed as a decimal fraction instead of a percentage. For example, if the interest rate is given as 7 percent, use the value 7/100 or 0.07.
4. Convert the annual interest rate to the monthly rate. An interest rate is typically given as an annual rate, while the interest on a mortgage loan is typically compounded monthly. In this case, divide the annual interest rate by 12 to get the interest rate for the compounding period (monthly rate). For example, if the annual interest rate is 7 percent, divide the decimal fraction 0.07 by 12 to get the monthly interest rate of 0.07/12. In this example, substitute 0.07/12 for i in the equation given in step 1.
5. Define N as the total number of monthly payments required to pay off the loan. Typically, the loan period is given in years while the payments are made monthly. In this case, multiply the term of the loan by 12 to get the number of monthly payments to make. For example, to calculate the payments on a 20 year loan, use 20 x 12 = 240 for the value n in the equation in step 1.
Got that? Want another method? Calculate the mortgage payments.
1. Determine the monthly payments on a $100,000 mortgage with an annual interest rate of 5 percent and a loan term of 15 years. Assume the interest is compounded monthly.
2. Calculate the interest rate i. The interest rate as a decimal fraction is 5/100 or 0.05. The monthly interest rate i is therefore 0.05/12 or about 0.00416667.
3. Calculate the number of payments n. This is 15 x 12 = 180.
4. Calculate the term (1+i)^n. This is given as (1 + 0.05/12)^180 = about 2.1137.
5. Use P = 100,000 for the principle of the loan
6. Solve the following equation M = P[i(1+i)^n]/[(1+i)^n -1] to calculate the monthly payment. M = 100,000 x [0.00416667 x 2.1137/2.1137 – 1] = 790.79. The monthly payment on this loan would be $790.79.
You can do this yourself for every type of loan, home price and mortgage interest rate you can think of. Or, for a mortgage repayment calculator The Federal Savings Bank can do it for you and with their Perfect Mortgage experience, they will help you relax throughout the home loan process.
The Federal Savings Bank
http://www.thefederalsavingsbank.com
It’s math time. We’ll give a chance to run now if you’d like. ………………………………………….
Still here? Okay, let’s learn how to figure repayment of a mortgage. Sounds like fun, huh?
This is one method that works well:
1. Use the following equation M = P[i(1+i)^n]/[(1+i)^n -1] to calculate the monthly payment of a mortgage loan. The monthly payment is M, the principal (amount of the loan) is P, the interest rate is i and the number of payments to make is n.
2. Define M and P as monetary values. They must be expressed in units of the same currency in order to use this formula.
3. Convert the interest rate i into a decimal fraction. The interest rate must be expressed as a decimal fraction instead of a percentage. For example, if the interest rate is given as 7 percent, use the value 7/100 or 0.07.
4. Convert the annual interest rate to the monthly rate. An interest rate is typically given as an annual rate, while the interest on a mortgage loan is typically compounded monthly. In this case, divide the annual interest rate by 12 to get the interest rate for the compounding period (monthly rate). For example, if the annual interest rate is 7 percent, divide the decimal fraction 0.07 by 12 to get the monthly interest rate of 0.07/12. In this example, substitute 0.07/12 for i in the equation given in step 1.
5. Define N as the total number of monthly payments required to pay off the loan. Typically, the loan period is given in years while the payments are made monthly. In this case, multiply the term of the loan by 12 to get the number of monthly payments to make. For example, to calculate the payments on a 20 year loan, use 20 x 12 = 240 for the value n in the equation in step 1.
Got that? Want another method? Calculate the mortgage payments.
1. Determine the monthly payments on a $100,000 mortgage with an annual interest rate of 5 percent and a loan term of 15 years. Assume the interest is compounded monthly.
2. Calculate the interest rate i. The interest rate as a decimal fraction is 5/100 or 0.05. The monthly interest rate i is therefore 0.05/12 or about 0.00416667.
3. Calculate the number of payments n. This is 15 x 12 = 180.
4. Calculate the term (1+i)^n. This is given as (1 + 0.05/12)^180 = about 2.1137.
5. Use P = 100,000 for the principle of the loan
6. Solve the following equation M = P[i(1+i)^n]/[(1+i)^n -1] to calculate the monthly payment. M = 100,000 x [0.00416667 x 2.1137/2.1137 – 1] = 790.79. The monthly payment on this loan would be $790.79.
You can do this yourself for every type of loan, home price and mortgage interest rate you can think of. Or, for a mortgage repayment calculator The Federal Savings Bank can do it for you and with their Perfect Mortgage experience, they will help you relax throughout the home loan process.
The Federal Savings Bank
http://www.thefederalsavingsbank.com