Mortgage payment calculator

technofy_bank · Joined: 06 Oct 2006 Posts: 4

Hey everyone,

One of my friend borrowed a mortgage loan for his home major improvement just recently and now he is alloting some part of his savings to first monthly payment.

He was suggested by a popular lender to use the mortgage payment calculator to calculate your monthly mortgage payments as it is frequently used by loan borrowers for the same purpose.

As the bank through which he has borrowed the loan is a small community institution he is not offered the service of this calculator.

He is considering the use of trusted websites online mortgage payment calculator.

Could anyone suggest me some general inputs used in mortgage payment calculator for calculating the monthly payments.

Credible information is required.

Signature edited due to off site link to another discussion group
chow

chow · Posted: Mon Oct 09, 2006 8:59 am Post subject:

Definitions:

PF = payment frequency, the number of payments per year. Use 12 for monthly.

I = interest rate

i = effective interest rate (we're going to calculate this)

n = period (the number of payments – the term or number of years in the mortgage times the number of payments per year.)

For the first step, calculate i. You can think of this as the effective interest rate per month:
i = (1 + I/PF)^(12/PF) - 1

Next, calculate n (this is the number of payments in your mortgage):
n= PF X term of mortgage

Now we need to calculate an annuity factor.
Annuity factor = {1 – [1/(1+i)]^n}/i

And finally,
Payment = Principal/Annuity factor

Lets do a quick example:
$100,000 mortgage at 7% interest. We'll assume a 30 year mortgage, with monthly payments.
i = (1+.07/12)^(12/12) - 1
= (1+1.00583333333)^1 - 1
= 1.00583333333 – 1
= .0058333333
Next, calculate n:
n= 12 X 30 (12 monthly payments, times 30 years)
= 360

Annuity factor
= {1 – (1/(1+i))^360}/.00583333333
= {1 – (1/1.0058333333)^360}/.0058333333
= {1-.994200497^360}/.0058333333
= {1-.123205853}/.005833333
= .876794147/.0058333333
= 150.3075

Payment = 100000/150.3075
= $665.30

The monthly mortgage payment would be $665.30. You can repeat this calculation for any interest rate, term, or mortgage amount.

technofy_bank · Joined: 06 Oct 2006 Posts: 4

Ok CHOW, very much thanks for the information but I am very much depressed to see my signature being edited again and again, this is the second time you have edited my signature.

Anyway thanks !!

Did you read the rules about posting and advertising? Your signature takes people to another board. Plain and simple. That is about the only link we don't allow anymore. BTW, I've edited your signature 3 times.

Why would anyone with a "banking" discussion board come over here and ask for a calculator to begin with?

And,

You're welcome!

chow

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

Read this post:

http://www.mortgageforum.net/viewtopic.php?t=1982

And then read the ad policy and signature policy. (Ad policy is in advertisements and the sig policy is in loan talk, just under the post I just linked.)

gciwo · Joined: 06 Oct 2007 Posts: 4

Thanks for informations.