Scribd Logo
Upload

Welcome to Scribd!

  • 116 views

    Calculating Mortgage Payments

    Uploaded by

    Manvir Hothi
    This document provides an example of how to calculate a mortgage for a $330,000 home over 25 years at an annual interest rate of 4.25%. It shows the monthly payment would be $1,787.74. A mortgage amortization schedule for the first 3 years is included, showing the monthly breakdown of principal and interest payments and the remaining balance. Finally, a data table is presented to illustrate how the monthly payment would change under different interest rates and terms of the mortgage.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd

    Calculating Mortgage Payments

    Uploaded by

    Manvir Hothi
    116 views2 pages
    This document provides an example of how to calculate a mortgage for a $330,000 home over 25 years at an annual interest rate of 4.25%. It shows the monthly payment would be $1,787.74. A mortgage amortization schedule for the first 3 years is included, showing the monthly breakdown of principal and interest payments and the remaining balance. Finally, a data table is presented to illustrate how the monthly payment would change under different interest rates and terms of the mortgage.

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document provides an example of how to calculate a mortgage for a $330,000 home over 25 years at an annual interest rate of 4.25%. It shows the monthly payment would be $1,787.74. A mortgage amortization schedule for the first 3 years is included, showing the monthly breakdown of principal and interest payments and the remaining balance. Finally, a data table is presented to illustrate how the monthly payment would change under different interest rates and terms of the mortgage.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    116 views2 pages

    Calculating Mortgage Payments

    Uploaded by

    Manvir Hothi
    This document provides an example of how to calculate a mortgage for a $330,000 home over 25 years at an annual interest rate of 4.25%. It shows the monthly payment would be $1,787.74. A mortgage amortization schedule for the first 3 years is included, showing the monthly breakdown of principal and interest payments and the remaining balance. Finally, a data table is presented to illustrate how the monthly payment would change under different interest rates and terms of the mortgage.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Manvir Hothi, B.

    Comm 1
    How to: Calculate a Mortgage Example
    Scenario:
    You are planning to purchase a house which will cost you $330,000. You
    plan on taking a 25-year mortgage with an annual interest rate of 4.25%. Payments
    will be made monthly.

    Step 1: State the Given


    Initial loan
    Mortgage term
    Annual rate

    330,000
    25
    4.25%

    Monthly payment

    Monthly rate (
    No. of periods (
    PVAF

    0.35%
    300
    184.59

    $1,787.74

    Where:
    Monthly Rate
    No. of periods
    PVAF

    Annual rate 12 months of a year


    Mortgage term X 12 months of a year
    Present Value of an Annuity Factor: Current value of a set of cash
    flows in the future. The equation is as follows:
    (

    Monthly payment

    Initial loan PVAF

    Step 2: Create a Mortgage Amortization Schedule


    The following table portrays the first three years (36 months) of the mortgage amortization
    schedule.
    Year
    1
    1
    1
    1
    1
    1
    1
    1
    1
    1
    1
    1
    2
    2
    2
    2

    Month
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12
    13
    14
    15
    16

    Initial loan
    330,000.00
    329,381.01
    328,759.84
    328,136.46
    327,510.87
    326,883.07
    326,253.05
    325,620.79
    324,986.29
    324,349.55
    323,710.55
    323,069.29
    322,425.76
    321,779.95
    321,131.85
    320,481.46

    Payment
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74

    Interest
    1,168.75
    1,166.56
    1,164.36
    1,162.15
    1,159.93
    1,157.71
    1,155.48
    1,153.24
    1,150.99
    1,148.74
    1,146.47
    1,144.20
    1,141.92
    1,139.64
    1,137.34
    1,135.04

    Principal
    618.99
    621.18
    623.38
    625.59
    627.80
    630.02
    632.26
    634.50
    636.74
    639.00
    641.26
    643.53
    645.81
    648.10
    650.39
    652.70

    End loan
    329,381.01
    328,759.84
    328,136.46
    327,510.87
    326,883.07
    326,253.05
    325,620.79
    324,986.29
    324,349.55
    323,710.55
    323,069.29
    322,425.76
    321,779.95
    321,131.85
    320,481.46
    319,828.76

    % Principal
    0.35
    0.35
    0.35
    0.35
    0.35
    0.35
    0.35
    0.35
    0.36
    0.36
    0.36
    0.36
    0.36
    0.36
    0.36
    0.37

    Manvir Hothi, B.Comm 2


    How to: Calculate a Mortgage Example
    Year
    2
    2
    2
    2
    2
    2
    2
    2
    3
    3
    3
    3
    3
    3
    3
    3
    3
    3
    3
    3

    Month
    17
    18
    19
    20
    21
    22
    23
    24
    25
    26
    27
    28
    29
    30
    31
    32
    33
    34
    35
    36

    Initial loan
    319,828.76
    319,173.75
    318,516.42
    317,856.77
    317,194.77
    316,530.44
    315,863.75
    315,194.69
    314,523.27
    313,849.47
    313,173.29
    312,494.71
    311,813.72
    311,130.33
    310,444.51
    309,756.27
    309,065.59
    308,372.46
    307,676.87
    306,978.83

    Payment
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74
    1,787.74

    Interest
    1,132.73
    1,130.41
    1,128.08
    1,125.74
    1,123.40
    1,121.05
    1,118.68
    1,116.31
    1,113.94
    1,111.55
    1,109.16
    1,106.75
    1,104.34
    1,101.92
    1,099.49
    1,097.05
    1,094.61
    1,092.15
    1,089.69
    1,087.22

    Principal
    655.01
    657.33
    659.66
    661.99
    664.34
    666.69
    669.05
    671.42
    673.80
    676.19
    678.58
    680.98
    683.40
    685.82
    688.24
    690.68
    693.13
    695.58
    698.05
    700.52

    End loan
    319,173.75
    318,516.42
    317,856.77
    317,194.77
    316,530.44
    315,863.75
    315,194.69
    314,523.27
    313,849.47
    313,173.29
    312,494.71
    311,813.72
    311,130.33
    310,444.51
    309,756.27
    309,065.59
    308,372.46
    307,676.87
    306,978.83
    306,278.31

    % Principal
    0.37
    0.37
    0.37
    0.37
    0.37
    0.37
    0.37
    0.38
    0.38
    0.38
    0.38
    0.38
    0.38
    0.38
    0.38
    0.39
    0.39
    0.39
    0.39
    0.39

    Where:
    Initial loan
    Payment
    Interest
    Principal
    End loan
    % Principal

    Beginning with the initial loan of $330,000, the End loan is carried forward
    as Initial loan in the subsequent months
    The payment of $1,787.74 is constant throughout the term of the mortgage
    Initial loan for each month X Monthly rate (
    The amount still owed on the mortgage, calculated as Payment less Interest
    Initial loan Principal
    Principal Payment; at the end of the term, you will have a % Principal of
    1.00

    Step 3: Draw a Data Table to Create Different Payment Scenarios


    1787.74

    20 yrs.

    21 yrs.

    22 yrs.

    23 yrs.

    24 yrs.

    25 yrs.

    3.00%
    3.50%
    4.00%
    4.25%
    4.50%
    4.75%
    5.00%

    1830.17
    1913.87
    1999.74
    2043.47
    2087.74
    2132.54
    2177.85

    1766.64
    1851.03
    1937.69
    1981.86
    2026.59
    2071.86
    2117.67

    1709.06
    1794.14
    1881.60
    1926.20
    1971.37
    2017.12
    2063.43

    1656.65
    1742.44
    1830.68
    1875.71
    1921.33
    1967.54
    2014.34

    1608.78
    1695.26
    1784.28
    1829.73
    1875.80
    1922.48
    1969.76

    1564.90
    1652.06
    1741.86
    1787.74
    1834.25
    1881.39
    1929.15

    You might also like