Calculating mortgage payments

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# Calculating mortgage payments - PowerPoint PPT Presentation

Calculating mortgage payments (Paying back your student loans) ^(T*12) Monthly interest rate *(1+monthly interest rate) Loan * ^(T*12) ((1+monthly interest rate) -1 ) ^(T*12) Monthly interest rate *(1+ monthly interest rate ) Loan * ^(T*12) ((1+ monthly interest rate ) -1 )

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## Calculating mortgage payments

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Presentation Transcript

Calculating

mortgage

payments

^(T*12)

Monthly interest rate *(1+monthly interest rate)

Loan *

^(T*12)

((1+monthly interest rate)

-1 )

^(T*12)

Monthly interest rate *(1+monthly interest rate)

Loan *

^(T*12)

((1+monthly interest rate)

-1 )

^(T*12)

Monthly interest rate *(1+monthly interest rate)

Loan *

^(T*12)

((1+monthly interest rate)

-1 )

Annual rate divided by months

(T * 12)

)

rate

rate

months

months

(

rate

1+

months

(

)

(

1+

x

(T * 12)

) - 1

(T * 12)

)

(

1+

(

)

(

1+

x

MIR

MIR

(T * 12)

) - 1

MIR

MIR = Monthly Interest Rate

Here is a sample problem:

30 year mortgage loan

\$60,000

annual interest rate of 12%,

what is the monthly payment?

.12

.12

12

12

(1 + ) - 1

.12

12

(T * 12)

(--)

(1+---)

x

(T * 12)

.12

12

(1 + ) - 1

.12

12

(T * 12)

(1+---)

(--)

.01

x

(T * 12)

(1 + ) - 1

.12

12

(T * 12)

(--)

(1+---)

.01

.01

x

(T * 12)

(T * 12)

(--)

(1+---)

.01

.01

x

(T * 12)

(1 + ) - 1

.01

(T * 12)

(--)

(1.01)

.01

x

(T * 12)

(1 + ) - 1

.01

(T * 12)

(--)

(1.01)

.01

x

(T * 12)

(1.01) - 1

(360)

(--)

(1.01)

.01

x

(T * 12)

(1.01) - 1

(360)

(--)

(1.01)

.01

x

(360)

(1.01) - 1

(--)

(35.9496)

.01

x

(360)

(1.01) - 1

(--)

(35.9496)

.01

x

(35.9496) - 1

Move the decimal 2 places left

.35.9496

(35.9496) - 1

.359496

35.9496- 1

Subtract 1

.359496

34.9496

Divide the fraction