Calculate the amount of the monthly payment?
30 90000 0.09 12 =(1+a3/a4)^(a1*a4) =a5/(a5-1) =a6*a2*a3/a4 30 90000 0.09 12 14.73057612 1.072830156 724.1603553 I make it $724.16 per month The formula is MP = i * PA * (1+i)^n /(((1+i)^n) - 1), where MP = monthly payment, i = monthly effective interest rate, PA = principal amount, and n = number of compounding periods - namely, months. In case you are interested in the source of this formula, it derives from the mathematical formula for the sum of a geometric series: S = 1 + x + x^2 + x^3 + ... + x^(n-1) = (x^n - 1) / (x - 1). Now, you can verify this, by multiplying the series S by (x - 1) and seeing that, because of some very convenient cancellation, you get x^n - 1. Now, by letting x = 1 + i, you have the amount to which a monthly deposit of $1.00, made at the end of the month, accumulates, with interest, at the end of n years: namely, S = (((1 + 1)^n) - 1) / i. Now, if you divide this by (1 + i)^n, you get the present value of this accumulation: namely, a = ((1 + i)^n - 1) / (i (1 + i)^n). To get ‘ i ‘, the monthly effective rate, I divided .09 by 12, since the 9% was already given as being compounded monthly. To get the monthly payment, then, I divided PA by a. You can see, from the numbers cryptically shown at the top, that I used Excel to do the calculation. I hope this helps you out.
I've been paying my mortgage for nearly ten years and the balance on my monthly statement is still very high. Is that the actual amount I would have to repay if I sold my house this month and paid the bond in full?
Depending upon the terms and conditions, when you are closing a loan you usually pay only the principle amount only minus interest.What you are seeing in your amortization schedule is principle plus interest.However they might charge you 1-2% on you remaining principal amount as your foreclosure fee/penalty.Yes you pay off more interest and less principal for the first few years.Look at this basic example. The numbers are not real but it will give you an idea.So if you have a loan for 20years and you paid $150,000 in the first 10years then you only paid rougly $35,000 in principle and rest in interest.Assuming you have a loan of $100,000 then when you opt for a foreclosure you will have to pay($100,000-$35,000) + (1% of 65,000) that sums to $71,500
Mortgage Math Problem (G11)?
I'm a little confused by the information provided. It looks like more information has been given than is really needed to answer those questions. Maybe it's a trick. I don't know. I put together my own amortization chart on Excel with the following inputs: o Original Principal Balance = $81,000 o Annual Interest Rate = 6.00% per year o Monthly Interest Rate = 6.00%/12 months = 0.50% per month o Amortization Period = 25 years (or 300 monthly payments) o Monthly Payment = $521.88 (according to my amortization chart) (NOTE: The 5-year term mentioned in the problem seems irrelevant to me. I assume the loan would have a balloon payment at the end of the 5 years but that doesn't make any difference in calculating the regular monthly payment.) At the end of three years (36 payments), the outstanding principal balance (according to my calculations) is $76,402.40. I have no idea what is meant by the other figures are that you listed at the end of your question. It looks like it may be a comparison of loan terms (time) and interest rates. However, in the real world (in today's environment anyway), the longer the term of the loan, the higher the interest rate. This seems to be exactly the opposite. As far as showing my work for the amortization chart, here is how I've laid out the spreadsheet... (NOTE: These items listed are COLUMNS, not rows) o Payment Number (1 through 300 for 25 years) o Unpaid Principal Balance o MONTHLY Interest Rate (0.5% in this case) o UPB + Interest Accrued for that month o (Monthly Payment) o Remaining Principal Balance (UPB + Interest Accrued - Payment) o The Remaining Principal Balance of the first row becomes UPB for the second row (and so on). (Repeat this row for each month of the amortization) Hope this makes sense. Good luck! PS - If I'm missing something, please let me know.
Can someone help me solve this math question finance related?
The Taylors have purchased a $240,000 house. They made an initial down payment of $10,000 and secured a mortgage with interest charged at the rate of 5%/year on the unpaid balance. Interest computations are made at the end of each month. If the loan is to be amortized over 30 years, what monthly payment will the Taylors be required to make? (Round your answer to the nearest cent.) Monthly payment is 1234.69 But what is their equity (disregarding appreciation) after 5 years? After 10 years? After 20 years? (Round your answers to the nearest cent.)
Does making two smaller twice monthly mortgage payments really pay it off significantly faster?
A2ADepends upon the payment amount, date etc. I am assuming that you are not talking about bi-weekly plan, which requires you to pay 3 payments in some months.Some loans, depending upon when you pay use the payment as if you paid them on the due date. In such cases, you save nothing.Assuming you pay half the payment 15 days in advance, and half the payment on due date, in the best case you are saving 15 days of interest on half the monthly installment, assuming your lender uses actual average daily balance to compute the interest. It won’t add up much, even after compounding. In fact, you are saving 15 days of interest not because you are paying in two installments, but because you are paying early, and reducing your daily balance. You can get a better effect by paying the entire installment, at the time of your half installment. Again, the savings will not be much, and that too only if the lender uses average daily balance to compute your interest, and not the schedule date on your loan.The actual savings come from two aspects. One, paying significantly more. Like biweekly plan will pay one entire installment extra every year. This is also not the best way.The best way is to take a smaller interest mortgage. Usually you are paying a gift to the bank if your mortgage is 30 years fixed. Often a 5 year adjustable rate mortgage is far more beneficial. In fact,reducing the interest rate by paying points is even better.In fact, if you use Faira, you can reduce your interest rate by as much as 50 basis points, without any additional cost to you. Faira gives you 2% rebate at closing (or 3% discount on purchase price). Usually 25 basis point reduction in interest rate costs 1% in paying points (25 basis point is 0.25%).If your 30 year mortgage costs $3,000/month. The same 30 year mortgage by paying $3,000 will finish your loan in about 27 years — that is without paying any extra penny — by buying points using Faira rebate. If you go with lower interest rate loan, you can finish your mortgage as early as in 20 years by paying the same $3,000/month. Of course, all other schemes of paying mortgage early require you to pay higher monthly installment. If you pay the higher monthly installment together with using the Faira rebate to buy points, and taking 5 years ARM, you can even finish the loan in 15 years without stretching budget too much.Faira | Home Buyers
With a 30-year mortgage, do you end up paying less and finishing paying it back before 30 years if you pay more than the monthly payments every month? How much can you save?
Yes, you do.Because mortgages are done using a “Interest First, then Principal” payment method (As opposed to a simple interest “Every payment makes the same amount towards principal and interest formula), it is very much in your financial interest to pay extra, particularly in the first 5–10 years of the loan (when the payments are almost exclusively applied to interest).An even better way, if your personal paycheck schedule allows it (by being paid every other week, rather than twice a month, this results in 26 paychecks per year vs 24) is to make a half mortgage payment on every single payday. This results in your paying the equivalent of 13 payments a year, and the 13th payment is (essentially) *completely* applied to principal, which can reduce your time to pay off the mortgage by a significant amount of time.There are a number of calculators available online which you can use to model this out. Among them are:Calculate savings, amortization table for biweekly mortgagesandBi-Weekly Mortgage Calculator - Extra Payment & Amortization Table (this one also has features allowing you to enter extra payment capabilities)
In his latest book Tony says: "Prepay your next month's principal, and you could pay off a 30-year mortgage in 15 years in many cases". Is this true?
To understand fully how this system works, you have to know that interest rate is calculated based on your outstanding loan balance and not on your monthly prepayment.The aim of making prepayments on your monthly principals is to, first of all, reduce the loan balance before next month’s interest rate is calculated.A 30 years’ mortgage for $40,000 with 5% interest would translate to an interest of $37,302.31 without any additional payments. But with an added payment of $100, the total interest to be repaid will be reduced to $17,078.06 and most importantly to 15 years instead of the original 30.In the first month, the total sum paid - $214- goes to the principal plus the interest account while $100 goes to the additional payment. This means that after the deduction of the $50- the main monthly payment- the-additional $100 will be deducted again from the loan balance of $39,050 remaining $38,050 to be used for calculating the interest unlike the $39,050 that would have been used without any additional prepayment of the principal.Though the difference may seem small but with repeat prepayment every month, a substantial amount would be saved in the payment of interest.With this additional monthly principal repayment, the principal on which the interest rate is to be calculated will be reducing at a much higher rate than if there is no additional prepayment on the principal.In the first month of the mortgage, with the additional payment of $100, the total of $314.73 will be the total sum of the mortgage. $214.73 would be the standard monthly payment while the extra payment of $100 will be deducted first from the loan balance before the interest rate is calculated in the following month. As a result of this, the interest will be reducing even though this doesn’t change the principal amount.Taking a look at the schedule prepared below, you will realize that the time to be used for the total payment of the mortgage would be reduced to 15 years.However, borrowers who want to pursue this option need to know that it will come with additional financial commitments every year. Therefore, before committing to additional payments on your principal, ensure you have analyzed all other necessary commitments.