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From GunGame5 Documentation

A mortgage uses your home as collateral.

Most people have to take away a mortgage when they buy a home. When you maintain a mortgage, you generally make monthly payments until the loan is repaid. With a fixed-rate loan, the payment remains the very same for the duration of the loan. However, the period regarding each expense that includes interest on the loan and the amount that goes toward paying down the principal differ. To calculate the home expense on a $300,000 loan, you must understand the term of the loan plus the annual attention rate.

Difficulty: Moderate

Things You'll Need

Scientific calcutator

1 Learn the amount regarding monthly payments you will make throughout the lifetime of the loan by multiplying the amount of long time in the mortgage by 12. Call the result P. For instance, if you took out any 20-year mortgage, you would multiply 20 times 12 to become 240 for P.

2 Divide your annual interest rate by 1200 to change it from an yearly percentage to a monthly rate mainly because attention is compounded monthly on home loans. For example, if your yearly curiosity rate is 7.2 percent, you would divide 7.2 in 1200 to get 0.006.

3 Multiply the monthly rate times $300,000. In this illustration, multiply 0.006 by $300,000 to secure $1,800.

4 Add the monthly interest rate to 1. For this example, you would add 0.006 plus 1 to acquire 1.006.

5 Elevate the result out of action 4 to the negative Pth power, where P is the number of monthly payments you will make. In this instance, you would raise 1.006 to the -240th power to purchase 0.237949407.

6 Calculate 1 minus the result away from action 5. Inside this example, you would take away 0.237949407 out of 1 to get 0.762050593.

7 Divide the result of $300,000 times the monthly curiosity rate (action 3) by the effect from stage 6 to calculate the monthly home payment. Finishing this example, you would separate $1,800 through 0.762050593 to uncover your monthly expense to be $2,362.05.

References

Oak Road Systems: Loan or Investment Formulas Foner Books: How to Calculate a Mortgage Expense

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